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As filed with the Securities and Exchange Commission on February 24, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
EXCITE, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C>
CALIFORNIA 77-0378215
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
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555 BROADWAY
REDWOOD CITY, CALIFORNIA 94063
(650) 568-6000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------
ROBERT C. HOOD
EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER
AND CHIEF FINANCIAL OFFICER
EXCITE, INC.
555 BROADWAY
REDWOOD CITY, CALIFORNIA 94063
(650) 568-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
MARK C. STEVENS, ESQ.
JEFFREY R. VETTER, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT UNTIL FEBRUARY 3,
2000 OR UNTIL THE EARLIER SALE OF ALL SHARES REGISTERED HEREUNDER.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _____________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]_____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, no par value 3,998,258 shares $ 42.50 $ 169,925,965 $50,128.16
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(1) Includes 85,671 shares of Common Stock issuable upon exercise of assumed
warrants.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act, based on
the average of the high and low prices of the Common Stock on the Nasdaq
National Market on February 20, 1998.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.
Subject to Completion - February 24, 1998
3,998,258 SHARES
EXCITE, INC.
COMMON STOCK
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All of the 3,998,258 shares of Common Stock, no par value ("Common
Stock") of Excite, Inc. (the "Company") offered hereby (the "Shares") are being
sold by certain shareholders of the Company named herein under "Selling
Shareholders" and may be offered for sale from time to time by and for the
account of such shareholders (collectively, the "Selling Shareholders") as more
fully described herein. Of these Shares, 85,671 are issuable upon exercise of
warrants. The Company will not receive any proceeds from the sale of Shares
offered hereby by the Selling Shareholders. See "Use of Proceeds," "Selling
Shareholders" and "Plan of Distribution." The Shares are being offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Securities Act"), during a period of time commencing on the
effective date of the Registration Statement of which this Prospectus forms a
part and ending on February 3, 2000 or the earlier sale of all the Shares
offered hereby.
The Common Stock is listed on the Nasdaq National Market under the
symbol "XCIT." The shares of Common Stock offered hereby will be sold from time
to time at then prevailing market prices, at prices related to prevailing market
prices or at negotiated prices. On February 20, 1998, the closing price per
share of the Common Stock on the Nasdaq National Market was $42.50.
Of the shares of Common Stock offered hereby 853,554 shares (including
2,087 shares issuable upon exercise of assumed warrants) were originally issued
by the Company in a merger transaction that occurred on November 24, 1997 (the
"Netbot Merger") in which the Company acquired all of the outstanding shares of
capital stock of Netbot, Inc. ("Netbot"). The remaining 3,144,704 shares
(including 83,584 shares issuable upon exercise of assumed warrants) offered
hereby were originally issued by the Company in a merger transaction that
occurred on February 3, 1998 in which the Company acquired all of the
outstanding shares of capital stock of MatchLogic, Inc. ("MatchLogic"). The
shares of Common Stock offered hereby represent approximately 18.2% of the
Company's outstanding shares of Common Stock as of the date of this Prospectus.
The Selling Shareholders, directly, through agents designated from time to time,
or through dealers or underwriters also to be designated, may sell the Shares,
jointly or severally, from time to time on terms to be determined at the time of
sale. To the extent required, the specific Shares to be sold, the public
offering price, the names of any such agent, dealer or underwriter and any
applicable commission or discount will be set forth in an accompanying
supplement to this Prospectus (a "Prospectus Supplement"). See "Selling
Shareholders" and "Plan of Distribution." Each of the Selling Shareholders,
individually, reserves the sole right to accept or reject, in whole or in part,
any proposed purchase of the Shares to be made in the manner set forth above.
The distribution of the Shares by the Selling Shareholders may be
effected from time to time in one or more transactions in the over-the-counter
market, in the Nasdaq National Market or in privately negotiated transactions
directly with the purchasers, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices. Any
underwriters, dealers or agents that participate in the distribution of the
Shares may be deemed to be "underwriters" within the meaning of Section 2(11) of
the Securities Act, and any profit on the sale of the Shares by them and any
discounts, concessions or commissions received by any such underwriters, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. See "Plan of Distribution" for indemnification arrangements
between the Company and the Selling Shareholders.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
COMMON STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO THE UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC (1) DISCOUNT COMPANY SHAREHOLDERS(1)
---------- -------- ------- ---------------
<S> <C> <C> <C> <C>
PER SHARE................................... see text above none none see text above
TOTAL....................................... see text above none none see text above
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(1) THE SHARES OF COMMON STOCK OFFERED HEREBY WILL BE SOLD FROM TIME TO TIME AT
THE THEN-PREVAILING MARKET PRICES, AT PRICES RELATING TO PREVAILING MARKET
PRICES OR AT NEGOTIATED PRICES. THE COMPANY WILL PAY EXPENSES OF
REGISTRATION ESTIMATED AT $100,000.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY SELLING SHAREHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission located at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at Seven World Trade Center, 13th Floor, New
York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials can also be
obtained from the Public Reference Section of the Commission, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
the Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding the Company. The address
of the Commission's Web site is http://www.sec.gov. The Company's Common Stock
is quoted for trading on the Nasdaq National Market, and reports, proxy
statements and other information concerning the Company may be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration Statement
and the exhibits filed therewith or incorporated therein by reference.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or incorporated therein by
reference, each such statement being qualified in all respects by such
reference. A copy of the Registration Statement may be inspected, without
charge, at the Commission's principal office in Washington, D.C. and copies of
all or any part of the Registration Statement may be obtained from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon the payment of the fees prescribed by
the Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the
Company are hereby incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K, as amended by Form 10-K/A,
for the fiscal year ended December 31, 1996.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
(c) The Company's Current Reports on Form 8-K filed on April 2, 1997 (as
amended by the Company's report on Form 8-K/A filed on May 9, 1997),
June 19, 1997, July 9, 1997, September 26, 1997, December 4, 1997 and
February 17, 1998.
(d) The Company's definitive Proxy Statement dated April 29, 1997 filed in
connection with the Company's 1997 Annual Meeting of Shareholders.
(e) All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering contemplated hereby.
(f) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission
under Section 12 of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering covered by this Prospectus shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein (solely with
respect to statements incorporated by reference herein from a document that was
filed prior to the date of this Prospectus), or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the information
that has been incorporated by reference in this Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Requests for copies of such information should be
directed to Robert C. Hood, Chief Financial Officer, Excite, Inc., 555 Broadway,
Redwood City, California 94063; telephone number (650) 568-6000.
THE COMPANY
Excite is an Internet media company offering a free Web online service.
The Excite Network consists of Excite's two flagship brands, Excite
(http://www.excite.com) and WebCrawler (http://webcrawler.com). Localized
versions of Excite are also available internationally for the United Kingdom,
Germany, France, Sweden, Australia and Japan. The Company was incorporated in
June 1994. The principal executive offices of the Company are located at 555
Broadway, Redwood City, California 94063, and its telephone number is (650)
568-6000. In this Prospectus, the term "Excite" or the "Company" refers to
Excite, Inc., a California corporation and its subsidiaries, unless the context
otherwise requires.
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RISK FACTORS
This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in the Prospectus. In addition to the other information in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing the Common Stock offered by this Prospectus.
LIMITED OPERATING HISTORY; NO ASSURANCE OF PROFITABILITY
The Company was founded in June 1994 and generated only limited
revenues prior to 1996. Accordingly, the Company has a limited operating history
upon which an evaluation of the Company and its current business can be based.
In addition, there is a lack of proven business models for companies like Excite
which rely substantially upon the sale of advertising on the Web. The Company's
business must be considered in light of the risks, expenses and problems
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets such as the Web and
Web-based advertising markets. Specifically, such risks include, without
limitation, the ability of the Company to maintain premier positions on high
traffic Web access points or to enter into additional distribution relationships
with Internet Service Providers ("ISPs"), or Online Service Providers ("OSPs");
the inability of the Company to maintain and increase levels of traffic on the
Excite Network; the ability of the Company to expand its international
operations, particularly in light of the fact that the Company has limited
operating experience in the international market; the ability of the Company to
successfully integrate sponsored services and the ability of the Company to meet
minimum guaranteed impressions under sponsorship agreements; the ability of the
Company to develop or acquire content for its services; consumer acceptance of
the Company's personalized Web services such as My Channel, e-mail services or
chat; the ability of the Company to generate commerce-related revenues; the
failure of the Company to anticipate and adapt to a developing market;
development of equal or superior services or products by competitors; the
failure of the market to adopt the Web as an advertising or commercial medium;
reductions in market prices for Web-based advertising as a result of competition
or otherwise; the ability of the Company to achieve higher CPM rates for
targeted advertising as well as the ability of the Company to increase the
percentage of its advertising inventory sold; the inability of the Company to
effectively integrate the technology and operations of acquired businesses or
technologies with its operations, including MatchLogic and Netbot; the inability
to identify, attract, retain and motivate qualified personnel; and general
economic conditions. There can be no assurance that the Company will be
successful in addressing such risks and any failure to do so could have a
material adverse effect on the Company's business, results of operations and
financial condition.
The Company has incurred significant operating losses since inception
and as of December 31, 1997, the Company had an accumulated deficit of
approximately $84.9 million. Although the Company has experienced significant
revenue growth during 1997, there can be no assurance that this growth rate will
be sustained or that revenues will continue to grow. There can also be no
assurance that any revenue growth that the Company experiences will be
indicative of future operating results. In addition, the Company has increased,
and plans to significantly increase further, its operating expenses as a result
of acquisitions and in order to increase its sales and marketing efforts, fund
greater levels of product development and increase its general and
administrative costs to support the enlarged organization. To the extent that
revenues do not grow at anticipated rates or that increases in such operating
expenses precede or are not subsequently followed by commensurate increases in
revenues, the Company's business, results of operations and financial condition
will be materially and adversely affected. There can be no assurance that in the
future the Company will be profitable on a quarterly or annual basis.
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POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS; UNPREDICTABILITY OF FUTURE REVENUES
As a result of the Company's limited operating history, the evolving
nature of its business and its acquisitions, the Company has limited meaningful
historical financial data upon which to base planned operating expenses.
Accordingly, the Company's expense levels are based in part on its expectations
as to future advertising revenues and to a large extent are fixed. There can be
no assurance that the Company will be able to accurately predict the levels of
future advertising revenues, particularly in light of the intense competition
for the sale of Web-based advertisements and the uncertainty as to the viability
of the Web as an advertising medium, and the failure to do so would have a
materially adverse effect on the Company's business, results of operations and
financial condition. In addition, the Company derives substantially all of its
revenues from the sale of advertising under short-term advertising contracts. As
a result, quarterly sales and operating results are dependent on advertising
revenues received within the quarter, which are difficult to forecast. The
cancellation or deferral of a small number of existing advertising contracts or
the failure to obtain new advertising contracts in any quarter could materially
and adversely affect the Company's business, results of operations and financial
condition for that quarter. Furthermore, the Company derives advertising revenue
based on the amount of traffic, or page views, on the Excite Network.
Accordingly, any significant shortfall of traffic on the Excite Network in
relation to the Company's expectations or the expectations of existing or
potential advertisers, would have an immediate material adverse effect on the
Company's business, results of operations and financial condition.
The Company's operating results have varied on a quarterly basis during
its limited operating history and the Company expects to experience significant
fluctuations in future quarterly operating results. Such fluctuations have been
and may in the future be caused by numerous factors, many of which are outside
the Company's control, including: specific economic conditions relating to the
Internet and the Web; usage of the Web; demand for advertising on the Excite
Network as well as demand for Web-based advertising in general; changes in
advertising rates as a result of competition or otherwise; seasonal trends in
advertising sales; the advertising budgeting cycles of advertisers; incurrence
of charges in connection with the Company's distribution relationships with
Netscape, AOL and other ISPs and OSPs or other third parties; demand for the
Company's services; incurrence of costs relating to acquisitions of businesses
or technologies; introduction or enhancement of services by the Company and its
competitors; market acceptance of new services; delays in the introduction of
services or enhancements by the Company or its competitors; mix of types of
advertisements sold, such as the amount of targeted advertising sold as a
percentage of total advertising sold; capacity constraints and dependencies on
computer infrastructure; and general economic conditions. The Company's limited
operating history and the emerging nature of its market make prediction of
future revenues difficult.
Due to all of the foregoing factors, the Company's quarterly revenues
and operating results are difficult to forecast. The Company believes that
period-to-period comparisons of its results of operations will not necessarily
be meaningful and should not be relied upon as an indication of future
performance. Also, it is likely that in some future quarter or quarters the
Company's operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Company's Common Stock
would be materially and adversely affected. See " -- Volatility of Stock Price."
INTENSE COMPETITION
The market for Web services and Web advertising is intensely
competitive. There are no substantial barriers to entry in these markets and the
Company expects competition to intensify. The Company believes that the number
of companies relying on fees from Web-based advertising has increased
substantially during the past year. Accordingly, the Company may face increased
pricing pressure for the sale of advertisements on its network, which would have
a material adverse effect on the Company's business, results of operations and
financial condition.
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The Company's primary competitors are Web search and retrieval
companies such as Infoseek Corporation, Lycos, Inc. and Yahoo!, Inc. and
specific search and retrieval services and products offered by other companies,
including Digital Equipment Corporation's Alta Vista, HotWired Venture's and
Inktomi's HotBot, and CNET, Inc.'s search.com. The Company also competes
indirectly with Web content broadcasting services, such as The PointCast
Network's PointCast, and with services from other database vendors, such as
Lexis/Nexis, Dialog and other companies that offer information search and
retrieval capabilities with their core database products. As the Company
increases the content offerings and services on the Excite Network, it will face
competition from a large number of businesses which offer Web services such as
e-mail, stock quotes, news and chat features and who publish information and
content on the Web, including large OSPs such as America Online and the
Microsoft Network.
In the future, the Company may encounter competition from ISPs, OSPs,
Web site operators, providers of Web browser software (such as Netscape or
Microsoft) and other Internet services and products that incorporate search and
retrieval features into their offerings. These potential competitors could take
actions that make it more difficult for consumers to find and use the Excite
Network. For example, Microsoft announced that it will offer Internet search
engine services provided by Inktomi in the Microsoft Network and other Microsoft
online properties. Such search services could be tightly integrated into the
Microsoft operating system, the Internet Explorer Web browser and other software
applications, and Microsoft may promote such services within the Microsoft
Network or through other end-user services such as WebTV. Insofar as Microsoft's
search services may be more conveniently accessed, this may provide Microsoft
with significant competitive advantages that could have a material adverse
effect on the Company's user traffic.
Many providers of Web services have been entering into distribution
arrangements, co-branding arrangements, content arrangements and other strategic
partnering arrangements with ISPs, OSPs, Web browsers, operators of high traffic
Web sites and other businesses in an attempt to increase traffic and page views,
and thereby making their Web sites more attractive to Web advertisers while also
making it more difficult for consumers to utilize the Company's services. For
example, Yahoo! and MCI entered into an agreement to offer an online service to
be called "Yahoo! Online powered by MCI Internet" under which Yahoo!'s services
will be made easily available to MCI Internet customers. To the extent that
direct competitors or other Web site operators are able to enter into successful
strategic relationships, these competitors and Web sites could experience
increases in traffic and page views, or the Company's traffic and page views
could remain constant or decline which could have the effect of making these Web
sites appear more attractive to advertisers which could have a material adverse
effect on the Company's business, results of operations and financial condition.
Many of the Company's existing competitors, as well as a number of
potential new competitors, have longer operating histories in the Web market,
greater name recognition, larger customer bases and significantly greater
financial, technical and marketing resources than the Company. Such competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. Further,
there can be no assurance that the Company's competitors will not develop Web
search and retrieval services or other online services that are equal or
superior to those of the Company or that achieve greater market acceptance than
the Company's offerings.
The Web in general, and the Company specifically, also must compete
with traditional advertising media such as print, radio and television for a
share of advertisers' total advertising budgets. To the extent that the Web is
not perceived as an effective advertising medium, advertisers may be reluctant
to devote a significant portion of their advertising budget to Web-based
advertising. There can be no assurance that the Company will be able to compete
successfully against its current or future competitors or that competition will
not have a material adverse effect on the Company's business, results of
operations and financial condition.
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RISKS RELATED TO SPONSORSHIPS
The Company has recently entered into sponsorship arrangements with
third parties to provide sponsored services and placements on the Excite Network
in addition to traditional banner advertising. In connection with these
arrangements, the Company may receive sponsorship fees as well as a portion of
transaction revenues received by the third party sponsor from users originated
through the Excite Network, in return for minimum levels of user impressions to
be provided by the Company. To the extent implemented, these arrangements expose
the Company to potentially significant financial risks, including the risk that
the Company fails to deliver required minimum levels of user impressions and
that third party sponsors do not renew the agreements at the end of their term.
These arrangements also require the Company to integrate the sponsor's content
with the Company's services which requires the dedication of resources and
significant programming and design efforts to accomplish. In addition, because
the Company has limited experience with these arrangements, the Company is
unable to determine what effect such arrangements will have on gross margins and
results of operations. Accordingly, there can be no assurance that these
sponsorship arrangements will not have material adverse effect on the Company's
business, results of operations and financial condition.
RISKS ASSOCIATED WITH ADVERTISING REVENUES
The Company derives substantially all of its revenues from the sale of
advertising on the Excite Network. A majority of the Company's advertising
customers purchase advertisements on a short term basis and many of the
Company's advertising customers may terminate their advertising commitments at
any time without penalty. Consequently, there can be no assurance that the
Company's advertising customers will continue or increase their level of
advertising on the Excite Network or that the Company's advertising customers
will not move their advertising to competing Web sites or to other traditional
media. Therefore, there can be no assurance that the Company will be successful
in maintaining or increasing the amount of advertising on the Excite Network and
the failure to do so could have a material adverse effect on the Company's
business, results of operations and financial condition.
ACQUISITION STRATEGY; INTEGRATION OF PAST AND FUTURE ACQUISITIONS
The Company has in the past and may in the future acquire businesses,
technologies, services, product lines, content databases, or access to content
databases that are complementary to the Company's business. For example, the
Company acquired The McKinley Group, Inc. ("McKinley") in August 1996, the
assets relating to the WebCrawler service ("WebCrawler") from AOL in March 1997,
Netbot in November 1997 and MatchLogic in February 1998. Acquisitions involve a
number of special risks, including, among other things, the difficulty of
assimilating the technologies, operations and personnel of acquired companies,
the potential disruption of the Company's business, diversion of resources,
incurrence of acquisition-related expenses, amortization of intangible assets,
the assumption of unknown liabilities, the inability to maintain uniform
standards, controls, procedures and policies and the impairment of relationships
with employees and strategic partners as a result of the acquisition or the
integration of new personnel. For example, the assimilation of McKinley's and
the Company's operations required, among other things, the integration of
service offerings, coordination of the research and development and sales and
marketing efforts of the two companies, the assumption by the Company of
approximately $10.0 million in liabilities, and the addition of a significant
number of additional personnel. The Company faced similar integration issues
with the acquisition of WebCrawler and could also face similar integration
issues with respect to the acquisitions of Netbot and MatchLogic, and there can
be no assurance that the Company will be successful in addressing these risks.
Any failure to successfully address these acquisition-related risks could have a
material adverse effect on the Company's business, results of operations and
financial condition.
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The Company has sought interpretative advice from the Securities and
Exchange Commission with respect to the proposed accounting treatment of the
acquisition of MatchLogic. In the event the Company is unable to account for
this acquisition as a pooling-of-interests, the Company believes that it could
incur significant charges relating to the amortization of goodwill and other
intangible assets. These charges could have a material adverse effect on the
Company's business, results of operations and financial condition.
DEVELOPING MARKET; VALIDATION OF THE WEB AS AN EFFECTIVE ADVERTISING MEDIUM
The market for the Company's services has recently begun to develop, is
rapidly evolving and is characterized by an increasing number of market entrants
who have introduced or developed services and products for use on the Web or who
seek to derive significant revenues from the sale of advertisements on the Web.
The Company is highly dependent upon the increased use of the Web for
information, publication, distribution and commerce. The Web as an advertising
medium has not been available for a sufficient period of time to gauge its
effectiveness as compared with traditional advertising media, and therefore the
Web is an unproven medium for advertising supported services. Accordingly, the
Company's future operating results will depend substantially upon the increased
use of the Web for information, publication, distribution and commerce and the
emergence of the Web as an effective advertising medium.
The Company's ability to generate significant advertising revenues will
also depend, among other things, the development of a large base of users of the
Company's services possessing demographic characteristics attractive to
advertisers, the ability of the Company to accurately measure its user base and
the ability of the Company to develop and update effective advertising delivery
and measurement systems. Many of the Company's advertisers have only limited
experience with the Web as an advertising medium, have not yet devoted a
significant portion of their advertising expenditures to Web-based advertising,
and may not find such advertising to be effective for promoting their products
and services relative to traditional print and broadcast media. The adoption of
Web advertising, particularly by those entities that have historically relied
upon traditional media for advertising, requires the acceptance of a new way of
conducting business and exchanging information. There can be no assurance that
the market for Web advertising will continue to emerge or become sustainable. If
the market fails to develop or develops more slowly than expected, the Company's
business, results of operations and financial condition could be materially and
adversely affected. No standards have been widely accepted for the measurement
of the effectiveness of Web-based advertising, and there can be no assurance
that such standards will develop sufficiently to support the Web as an effective
advertising medium. There can be no assurance that advertisers will accept the
Company's or other third-party measurements of impressions, or that such
measurements will not contain errors. In such event, the Company's advertising
revenues could be materially adversely affected which could have a material
adverse effect on the Company's business, results of operations and financial
condition.
In addition, there is intense competition in the sale of advertising on
the Web, resulting in a wide range of rates quoted and a variety of pricing
models offered by different vendors for a variety of advertising services which
makes it difficult to project future levels of advertising revenues and rates.
It is also difficult to predict which pricing models will be adopted by the
industry or advertisers. For example, advertising rates based on the number of
"click throughs," or user requests for additional information made by clicking
on the advertisement from the Company's network to the advertiser's Web pages,
instead of rates based solely on the number of impressions, would materially
adversely affect the Company's revenues. As a result of these risks, there can
be no assurance that the Company will be successful in generating significant
future advertising revenues from Web-based advertising, and the failure to do so
would have a material adverse effect on the Company" business, results of
operations and financial condition.
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Further, there can be no assurance that advertisers will determine that
banner advertising, the delivery of which currently comprises a substantial
portion of the Company's revenues, is an effective or attractive advertising
medium, and there can be no assurance that the Company will effectively
transition to any other forms of Web advertising should they develop and achieve
market acceptance. Moreover, "filter" software programs that limit or prevent
advertising from being delivered to a Web user's computer are available.
Widespread adoption of such software by users could have a material adverse
effect upon the commercial viability of Web advertising, which would have a
material adverse effect on the Company's business, results of operations and
financial condition.
DEPENDENCE ON THIRD-PARTY RELATIONSHIPS
The Company is currently and will be in the future dependent on a
number of third-party relationships for user traffic and to provide content on
the Excite Network and to make it more attractive to advertisers and consumers.
These relationships include arrangements relating to the positioning of the
Excite Network on Web browsers such as those offered by Netscape and Microsoft,
agreements with ISPs and OSPs such as AOL and Microsoft and arrangements for
providing content for the Excite Network such as stock quotes and news stories.
For example, the Company's brands are featured as a "Premier Provider" or
"Marquee Providers" on Netscape's Web site and the Company believes that
approximately 13% of its daily user traffic is directed from Netscape. The
termination of, or the failure of the Company to renew on reasonable terms, its
position on a Web browser or its relationship with an ISP, OSP or key content
provider could significantly reduce traffic on the Excite Network or could
otherwise adversely affect the Company's advertising revenues which would also
have a material adverse effect on the Company's business, results of operations
and financial condition. The Company's agreements with Netscape expire in May
1998. If the Company were unable to enter into replacement agreements with
Netscape with respect to its "Premier Provider" or "Marquee Provider"
arrangements at the end of the term of the agreements, the Excite Network could
lose a portion of its traffic or could otherwise become less attractive to
advertisers, and as a result, advertising revenues would be materially and
adversely affected. In addition, if any replacement agreements with Netscape are
on materially worse terms than those of the Company's current Premier Provider
Agreement or Marquee Provider Agreement, there would be a material adverse
effect on the Company's business, results of operations and financial condition.
The Company could also incur expenses relating to distribution license fees as a
result of a new agreement with a third party, including Netscape. These
distribution license fees could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company is also generally dependent on other Web site operators
that provide links to the Excite Network. Most of these arrangements do not
require future minimum commitments to use the Company's services to provide
access or links to the Excite Network or to provide content to the Company, are
often not exclusive and are often short-term or may be terminated at the
convenience of the other party. There can be no assurance that these third
parties regard their relationship with the Company as important to their own
respective businesses and operations, that they will not reassess their
commitment to the Excite Network at any time in the future, or that they will
not develop their own competitive services or products. Further, there can be no
assurance that the services of those companies that provide access to the Excite
Network will achieve market acceptance or commercial success and therefore there
can be no assurance that any significant amount of traffic will be directed to
the Excite Network as a result of these third party relationships. Accordingly,
there can be no assurance that the Company's existing relationships will result
in sustained business partnerships, successful service offerings, the generation
of significant traffic in the Excite Network or significant revenues for the
Company.
The Company has also entered into a five-year distribution agreement
with AOL which expires in November 2001 pursuant to which a co-branded version
of the Excite search and directory service is
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designated as the exclusive Web search and retrieval service for AOL for an
initial two-year period ending in November 1998. If the exclusivity period does
not extend beyond the initial two year term, the co-branded service would become
the "default" search and directory service of AOL, however, AOL could enter into
a strategic relationship with a competitor of the Company or offer its own
competing services. In such an event, the amount of the Company's traffic and
advertising revenues could be materially and adverse affected.
PRIVACY CONCERNS
The Company's services and the recently acquired MatchLogic use
"cookies" to deliver targeted advertising, help compile demographic information
about users and limit the frequency with which an ad is shown to the user.
Cookies are bits of information keyed to a specific drive and passed to a Web
site server through the user's browser software. Cookies are placed on the
user's hard drive without the user's knowledge or consent, but can be removed by
the user at any time through the modification of the user's browser settings.
Due to privacy concerns, some Internet commentators, advocates and governmental
bodies have suggested that the use of cookies be limited or eliminated. In
addition, certain currently available Web browsers allow a user to delete
cookies or prevent cookies from being stored on the user's hard drive. Any
reduction or limitation in the use of cookies could limit the effectiveness of
the Company's ad targeting which could result in the Company experiencing lower
CPM rates for its advertisements which could have a material adverse effect on
the Company's business, results of operations and financial condition.
DEPENDENCE ON CONTINUED GROWTH IN USE OF THE WEB
The Company's success is highly dependent upon continued growth in the
use of the Web generally and, in particular, as a medium for advertising,
information services and commerce. Use of the Web by consumers is at a very
early stage of development, and market acceptance of the Web as a medium for
advertising, information services and commerce is subject to a high level of
uncertainty. The rapid growth of global commerce and the exchange of information
on the Web and other online services is new and evolving, making it difficult to
predict whether the Web will prove to be a viable commercial marketplace. The
Company believes that its future success will require the development and
widespread acceptance of the Web and online services as a medium for advertising
and commerce. There can be no assurance that the Web will be a successful
commerce and information channel. If use of the Web does not continue to grow,
the Company's business, results of operations and financial condition would be
materially and adversely affected.
SECURITY RISKS
A significant barrier to electronic commerce and communications is the
secure transmission of confidential information over public networks. There can
be no assurance that advances in computer capabilities, new discoveries in the
field of cryptography or other events or developments will not result in
compromises or breaches of the security systems used by the Company or other Web
sites to protect proprietary information. If any such compromises of security
were to occur it could have a material adverse effect on the use of the Web for
commerce and communications and on the Company's business, results of operations
and financial condition. A party who is able to circumvent the Company's
security measures could misappropriate proprietary information or cause
interruptions in the Company's operations. The Company may be required to expend
significant capital and other resources to protect against the threat of such
security breaches or to alleviate problems caused by such breaches. To the
extent that activities of the Company or sponsors of the Company's services
involve the storage and transmission of proprietary information, such as credit
card numbers, security breaches could expose the Company to a risk of loss or
litigation and possible liability. There can be no assurance that the Company's
security measures will prevent security breaches or that the failure to
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prevent such breaches would not have a material adverse effect on the Company's
business, results of operations and financial condition.
RAPID TECHNOLOGICAL CHANGE
The market in which the Company competes is characterized by rapidly
changing technology, evolving industry standards, frequent new service and
product announcements, introductions and enhancements and changing customer
demands. These market characteristics are exacerbated by the emerging nature of
the Web and the apparent need of companies from a multitude of industries to
offer Web-based products and services. Accordingly, the Company's future success
will depend on its ability to adapt to rapidly changing technologies, its
ability to adapt its services to evolving industry standards and its ability to
continually improve the performance, features and reliability of its network in
response to both evolving demands of the marketplace and competitive service and
product offerings. The failure of the Company to adapt to such changes and
evolution would have a materially adverse effect on the Company's business,
results of operations and financial condition. In addition, the widespread
adoption of new Internet, networking or telecommunications technologies or other
technological changes could require substantial expenditures by the Company to
modify or adapt its services or infrastructure which could have a material
adverse effect on the Company's business, results of operations and financial
condition.
DEPENDENCE ON NEW AND ENHANCED SERVICES
Because the attractiveness of the Excite Network to advertisers is
based substantially upon the amount of traffic on the Excite Network, broad
acceptance of the Excite Network by consumers is critical to the Company's
future success. The Company currently offers and plans to introduce a variety of
Web-related services, including its e-mail, Excite NewsTracker and chat
services. Any new service launched by the Company that is not favorably received
by consumers could adversely affect the Company's reputation or brand name and
could also adversely affect the Company's user traffic. There can also be no
assurance that the Company will not experience difficulties that could delay or
prevent the successful design, development, testing, introduction or marketing
of these services, or that its new services and enhancements will achieve any
degree of significant market acceptance. Furthermore, existing services or new
releases by the Company, whether improved versions of existing services or
introductions of new services, may contain undetected errors that require
significant design modifications. Delays in the commencement of or errors
contained in new services and enhancements may result in customer
dissatisfaction and delay or loss of advertising revenue. If the Company is
unable, for technological or other reasons, to develop and introduce new
services or enhancements in a timely manner, or if the recently introduced
services or enhancements contain errors or do not achieve a significant degree
of market acceptance, the Company's business, results of operations and
financial condition could be materially and adversely affected.
UNCERTAIN MAINTENANCE AND STRENGTHENING OF THE COMPANY'S BRANDS
The Company believes that maintaining and strengthening its brands is
critical to achieving widespread acceptance of the Excite Network, particularly
in light of the competitive nature of the Company's market. Promoting and
positioning its brands will depend largely on the success of the Company's
marketing efforts and the ability of the Company to provide high quality
services. In order to promote its brands, the Company may find it necessary to
increase its marketing budget or otherwise increase its financial commitment to
creating and maintaining brand loyalty among customers. If the Company fails to
promote and maintain its brands or incurs excessive expenses in an attempt to
promote and maintain its brands or if the Company's existing or future strategic
relationships fail to promote the Company's brands or increase brand awareness,
the Company's business, results of operations and financial condition could be
materially adversely affected.
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MANAGEMENT OF GROWTH
The Company's rapid growth has placed, and is expected to continue to
place, a significant strain on the Company's managerial, operational and
financial resources. As of February 15, 1998, the Company had grown to 318
employees from 188 employees at December 31, 1996. Further, as the number of the
Company's users, advertisers and other business partners has grown, the Company
is required to manage multiple relationships with various customers, strategic
partners and other third parties. These requirements will be exacerbated in the
event of further growth in the Company or in the number of its strategic
relationships or sponsorship arrangements. There can be no assurance that the
Company's systems, procedures or controls will be adequate to support the
Company's operations or that Company management will be able to achieve the
rapid execution necessary to successfully offer its services and implement its
business plan. The Company's future operating results will also depend on its
ability to expand its sales and marketing organization and expand its support
organization commensurate with the growth of its business and the Web. If the
Company is unable to manage growth effectively, the Company's business, results
of operations and financial condition will be materially and adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
A key component of the Company's strategy is to expand its
international operations and its international sales and marketing activities by
offering localized versions of the Excite Network through joint venture
arrangements or other strategic agreements. Expansion into these markets has
required and will continue to require management attention and resources and may
require the Company to localize its services for a particular market. The
Company has limited experience in localizing its services and many of the
Company's competitors are also undertaking to expand into foreign markets. There
can be no assurance that the Company will be successful in expanding into
international markets. In addition to the uncertainty regarding the Company's
ability to generate revenues from foreign operations and expand its
international presence, there are certain risks inherent in doing business on an
international basis, including, among others, regulatory requirements, legal
uncertainty regarding liability, tariffs and other trade barriers, difficulties
in staffing and managing foreign operations, longer payment cycles, problems in
collecting accounts receivable, political instability, seasonal reductions in
business activity and potentially adverse tax consequences, any of which could
adversely affect the success of the Company's international operations. To the
extent the Company expands its international operations and has additional
portions of its international revenues denominated in foreign currencies, the
Company could become subject to increased risks relating to foreign currency
exchange rate fluctuations. There can be no assurance that one or more of the
factors discussed above will not have a material adverse effect on the Company's
future international operations and, consequently, on the Company's business,
results of operations and financial condition.
RISK OF CAPACITY CONSTRAINTS; DEPENDENCE ON COMPUTER INFRASTRUCTURE
The Company is dependent on its ability to generate a high volume of
traffic to the Excite Network. Accordingly, the performance of the Excite
Network is critical to the Company's reputation, its ability to attract
advertisers and to achieve market acceptance of the network. Any system failure
that causes interruptions in the availability or increases response time of the
Company's services could reduce user satisfaction and traffic to the Excite
Network and, if sustained or repeated, would reduce the attractiveness of the
Excite Network to advertisers and consumers. An increase in the volume of
searches conducted through the Excite Network could strain the capacity of the
software or hardware deployed by the Company, which could lead to slower
response time or system failures. In addition, as the amount of Web pages and
traffic increases, there can be no assurance that the Excite Network will be
able to scale proportionately. The Company is also dependent upon Web browsers,
ISPs, OSPs and other Web site operators, which have experienced significant
outages in the past, for access to its
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network, and Web consumers have experienced outages, delays and other
difficulties due to system failures unrelated to the Company's systems and
services. Additional difficulties could also materially and adversely affect
consumer and advertiser satisfaction. To the extent that the capacity restraints
described above are not effectively addressed by the Company, such constraints
would have a material adverse effect on the Company's business, results of
operations and financial condition.
Substantially all of the Company's communications hardware and certain
of its computer hardware operations are located at leased facilities in Redwood
City, California, an area susceptible to earthquakes. The Company has
experienced system failures or outages from time to time in the past, which have
disrupted the operation of the Excite Network. There can be no assurance that a
system failure at this location would not adversely affect the performance of
the Excite Network. These systems are also vulnerable to damage from fire,
floods, earthquakes, power loss, telecommunications failures, break-ins and
similar events. The Company does not presently have a disaster recovery plan.
Although the Company carries property and business interruption insurance with
low coverage limits, its coverage may not be adequate to compensate the Company
for all losses that may occur. The Company's servers are also vulnerable to
computer viruses, physical or electronic break-ins and similar disruptive
problems. Computer viruses, break-ins or other problems caused by third parties
could lead to interruptions, delays or cessations in service to users of the
Excite Network. The occurrence of any of these risks could have a material
adverse effect on the Company's business, results of operations and financial
condition.
DEPENDENCE ON THE WEB INFRASTRUCTURE
The success of the Excite Network will depend in large part upon the
development and maintenance of the Web infrastructure, such as a reliable
network backbone with the necessary speed, data capacity and security, or timely
development of complementary products such as high speed modems, for providing
reliable Web access and services. Because global commerce and online exchange of
information on the Web and other similar open wide area networks are new and
evolving, it is difficult to predict with any assurance whether the Web will
prove to be a viable commercial marketplace. The Web has experienced, and is
expected to continue to experience, significant growth in the number of users
and amount of traffic. To the extent that the Web continues to experience
increased numbers of users, frequency of use or increased bandwidth requirements
of users, there can be no assurance that the Web infrastructure will continue to
be able to support the demands placed on it by this continued growth or that the
performance or reliability of the Web will not be adversely affected by this
continued growth. Furthermore, the Web has experienced a variety of outages and
other delays as a result of damage to portions of its infrastructure, and could
face such outages and delays in the future, including outages and delays
resulting from the inability of certain computers or software to distinguish
dates in the 21st century from dates in the 20th century. These outages and
delays could adversely affect the level of Web usage and also the level of
traffic on the Excite Network. In addition, the Web could lose its viability due
to delays in the development or adoption of new standards and protocols (for
example, the next-generation Internet Protocol) to handle increased levels of
activity or due to increased governmental regulation. There can be no assurance
that the infrastructure or complementary products or services necessary to make
the Web a viable commercial marketplace will be developed, or, if they are
developed, that the Web will become a viable commercial marketplace for services
such as those offered by the Company. If the necessary infrastructure standards
or protocols or complementary products, services or facilities are not
developed, or if the Web does not become a viable commercial marketplace, the
Company's business, results of operations and financial condition will be
materially and adversely affected. Even if such infrastructure, standards or
protocols or complementary products, services or facilities are developed and
the Web becomes a viable commercial marketplace, there can be no assurance that
the Company will not be required to incur substantial
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expenditures in order to adapt its services to changing Web technologies, which
could have a material adverse effect on the Company's business, results of
operations and financial condition.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses generally,
and there are currently few laws or regulations directly applicable to access to
or commerce on the Web. However, due to the increasing popularity and use of the
Web, it is possible that a number of laws and regulations may be adopted with
respect to the Web, covering issues such as user privacy, pricing,
characteristics and quality of products and services. For example, although it
was held unconstitutional, the Telecommunications Act of 1996 prohibited the
transmission over the Internet of certain types of information and content and
other nations, including Germany, have taken actions to restrict the free flow
of material deemed to be objectionable on the Web. In addition, several
telecommunications carriers are seeking to have telecommunications over the Web
regulated by the Federal Communications Commission (the "FCC") in the same
manner as other telecommunications services. In addition, because the growing
popularity and use of the Web has burdened the existing telecommunications
infrastructure and many areas with high Web use have begun to experience
interruptions in phone service, local telephone carriers, such as Pacific Bell,
have petitioned the FCC to regulate ISPs and OSPs in a manner similar to long
distance telephone carriers and to impose access fees on the ISPs and OSPs. If
either of these petitions is granted, or the relief sought therein is otherwise
granted, the costs of communicating on the Web could increase substantially,
potentially slowing the growth in use of the Web, which could in turn decrease
the demand for the Company's services. The adoption of any additional laws or
regulations may also decrease the growth of the Web, which could in turn
decrease the demand for the Excite Network or could increase the Company's cost
of doing business. Moreover, the applicability to the Web of existing laws in
various jurisdictions governing issues such as property ownership, libel and
personal privacy is uncertain and will take years to resolve. Any such new
legislation or regulation or application or interpretation of existing laws
could have a material adverse effect on the Company's business, results of
operations and financial condition.
Due to the global nature of the Web, it is possible that, although
transmissions of the Excite Network originate in the State of California, the
governments of other states and foreign countries might attempt to regulate the
Company's transmissions or prosecute the Company for violations of their laws.
There can be no assurance that violations of local laws will not be alleged or
charged by state or foreign governments, that the Company might not
unintentionally violate such law or that such laws will not be modified, or new
laws enacted, in the future. It is also possible that states or foreign
countries may seek to impose sales taxes on out of state companies that engage
in commerce over the Internet. In the event that states or foreign countries
succeed in imposing sales or other taxes on Internet commerce, the growth of the
use of the Internet for commerce could slow substantially. Any of the foregoing
developments could have a material adverse effect on the Company's business,
results of operations and financial condition.
LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB
Because materials contained on the Web may be accessed through the
services offered by the Company and be subsequently distributed to others, there
is a potential that claims may be made against the Company for defamation,
negligence, copyright or trademark infringement or other theories based on the
nature and content of such materials. Such types of claims have been brought,
and sometimes successfully pressed, against OSPs and ISPs in the past. In
addition, the Company could be exposed to liability with respect to the
selection of listings that may be accessible through the Company's services and
through content and materials that may be posted by users in classifieds,
bulletin board and chat room services offered by the Company. Such claims might
include, among others, that by providing
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hypertext links to Web sites operated by third parties, the Company is liable
for copyright or trademark infringement or other wrongful actions by such third
parties through such Web sites. It is possible that if any information provided
through the Company's services, such as stock quotes, analyst estimates or other
trading information, contains errors, third parties could make claims against
the Company for losses incurred in reliance on such information. The Company
recently began offering Web-based e-mail services, which expose the Company to
potential risks, such as liabilities or claims resulting from unsolicited e-mail
(spamming), lost or misdirected messages, illegal or fraudulent use of e-mail or
interruptions or delays in e-mail service.
From time to time, the Company enters into agreements with sponsors,
content providers, service providers and merchants under which the Company is
entitled to receive a share of revenue from the purchase of goods and services
by users of the Company's services. Such arrangements may expose the Company to
additional legal risks and uncertainties, including, without limitation,
potential liabilities to consumers of such products and services. Although the
Company carries general liability insurance, the Company's insurance may not
cover potential claims of this type, or may not be adequate to indemnify the
Company for all liability that may be imposed. Any imposition of liability that
is not covered by insurance or is in excess of insurance coverage could have a
material adverse effect on the Company's business, results of operations and
financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company's performance is substantially dependent on the performance
of its executive officers and other key employees. Given the Company's early
stage of development, the Company is dependent on its ability to attract, train,
retain and motivate high quality personnel, especially its management and
engineering and development teams. The Company does not have "key person" life
insurance policies on any of its employees. The loss of the services of any of
its other executive officers or key employees could have a material adverse
effect on the business, results of operations or financial condition of the
Company. The Company's future success also depends on its continuing ability to
attract, train, retain and motivate other highly qualified technical and
managerial personnel. Competition for such personnel is intense, particularly in
the San Francisco Bay Area, and there can be no assurance that the Company will
be able to attract, train, retain or motivate other highly qualified technical
and managerial personnel in the future and the failure to do so could have a
material adverse effect on the Company's business, results of operations and
financial condition.
PROPRIETARY TECHNOLOGY; POTENTIAL LITIGATION
The Company regards its technology as proprietary and attempts to
protect it with copyrights, trademarks, trade secret laws, restrictions on
disclosure and transferring title and other methods, and has been issued a
patent with respect to certain aspects of its searching and indexing technology.
The Company has filed two patent applications with respect to other aspects of
its technology. There can be no assurance that the patent that has been issued
is, or that any patents that may issue from these pending applications will be,
sufficiently broad to protect the Company's technology. In addition, there can
be no assurance that any patents that have been issued or that may be issued
will not be challenged, invalidated or circumvented, or that any rights granted
thereunder would provide proprietary protection to the Company. Failure of any
patents to provide protection of the Company's technology may make it easier for
the Company's competitors to offer technology equivalent to or superior to the
Company's technology. The Company also generally enters into confidentiality or
license agreements with its employees and consultants, and generally controls
access to and distribution of its documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use the Company's services or technology without
authorization, or to develop similar technology independently. In addition,
effective copyright, trademark and trade secret protection may be unavailable or
limited in certain foreign countries, and the global nature of the Web
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makes it virtually impossible to control the ultimate destination of the
Company's products. Policing unauthorized use of the Company's technology is
difficult. There can be no assurance that the steps taken by the Company will
prevent misappropriation or infringement of its technology. In addition,
litigation may be necessary in the future to enforce the Company's intellectual
property rights, to protect the Company's trade secrets or to determine the
validity and scope of the proprietary rights of others. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Many parties, including competitors of the Company, are actively
developing search, indexing and related Web technologies. Some of these parties
have and the Company believes that others will take steps to protect these
technologies, including seeking patent protection. As a result, the Company
believes that disputes regarding the ownership of such technologies are likely
to arise in the future.
From time to time, the Company has received, and may receive in the
future, notice of claims of infringement of other parties' proprietary rights,
including claims for infringement resulting from the downloading of materials by
the service operated by the Company. Although the Company investigates claims
and responds as it deems appropriate, there can be no assurance that
infringement or invalidity claims (or claims for indemnification resulting from
infringement claims) will not be asserted or prosecuted against the Company or
that any assertions or prosecutions will not materially and adversely affect the
Company's business, results of operations and financial condition. Irrespective
of the validity or the successful assertion of such claims, the Company would
incur significant costs and diversion of resources with respect to the defense
thereof which could have a material adverse effect on the Company's business,
results of operations and financial condition. If any claims or actions were
asserted against the Company, the Company might seek to obtain a license under a
third party's intellectual property rights. There can be no assurance, however,
that under such circumstances a license would be available on commercially
reasonable terms, or at all.
The Company currently owns and also licenses from third parties certain
of its technologies. As it continues to introduce new services that incorporate
new technologies, it anticipates that it may be required to license additional
technology from others. There can be no assurance that these third-party
technology licenses will be available to the Company on commercially reasonable
terms, if at all. The inability of the Company to obtain any of these technology
licenses could result in delays or reductions in the introduction of new
services or could materially and adversely affect the performance of its
services until equivalent technology could be identified, licensed and
integrated. Any such delays or reductions in the introduction of services or
adverse impact on service quality could materially and adversely affect the
Company's business, results of operations and financial condition.
CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN SHAREHOLDERS
Upon completion of this offering, the present directors and executive
officers and certain shareholders of the Company and their respective affiliates
will, in the aggregate, beneficially own approximately 52.7% of the outstanding
Common Stock. As a result, these shareholders will possess significant influence
over the Company, giving them the ability, among other things, to elect a
significant portion of the Company's Board of Directors (or the entire Board of
Directors when and if cumulative voting is eliminated) and approve significant
corporate transactions. In addition, upon completion of this offering AOL and
Intuit Inc. ("Intuit") will beneficially own approximately 12.0% and 13.2%,
respectively, of the outstanding Common Stock. Such concentration of share
ownership may also have the effect of delaying or preventing a change in control
of the Company, impede a merger, consolidation, takeover or other business
combination involving the Company or discourage a potential acquiror from making
a tender offer or otherwise attempting to obtain control of the Company.
18
<PAGE> 19
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock is highly volatile and
is subject to wide fluctuations in response to a wide variety of factors
including, quarterly variations in operating results, announcements of
technological innovations or new services by the Company or its competitors,
conditions affecting the Internet industry changes in financial estimates by
securities analysts, or other events or factors. For example, during 1997, the
Company's Common Stock closed as low as $7.88 and as high as $34.38 per share.
In addition, the stock market has experienced significant price and volume
fluctuations that have particularly affected the market prices of equity
securities of many high technology companies and that often have been unrelated
to the operating performance of such companies. In the past, following periods
of volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. If brought
against the Company, such litigation could result in substantial costs and a
diversion of management's attention and resources, which would have a material
adverse effect on the Company's business, results of operations and financial
condition. These broad market fluctuations may adversely affect the market price
of the Company's Common Stock.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The Company currently anticipates that its available funds will be
sufficient to meet its anticipated needs for working capital, capital
expenditures and business expansion for the next 12 months. Thereafter, the
Company may need to raise additional funds. The Company may need to raise
additional funds sooner in order to fund more rapid expansion, to develop new or
enhanced services or products, to respond to competitive pressures or to acquire
complementary products, businesses or technologies. If additional funds are
raised through the issuance of equity or convertible debt securities, the
percentage ownership of the shareholders of the Company will be reduced,
shareholders may experience additional dilution and such securities may have
rights, preferences or privileges senior to those of the holders of the
Company's Common Stock. There can be no assurance that additional financing will
be available on terms favorable to the Company, or at all. If adequate funds are
not available or are not available on acceptable terms, the Company may not be
able to fund its expansion, take advantage of unanticipated acquisition
opportunities, develop or enhance services or products or respond to competitive
pressures. Such inability could have a material adverse effect on the Company's
business, results of operations and financial condition.
SHARES ELIGIBLE FOR FUTURE SALE; SHELF REGISTRATION STATEMENTS AND REGISTRATION
RIGHTS
Sales of a substantial number of shares of Common Stock in the public
market following this offering could adversely affect the market price for the
Company's Common Stock. The number of shares of Common Stock available for sale
in the public market is limited by restrictions under the Securities Act of
1933, as amended (the "Securities Act"). In addition to the 3,998,258 shares of
Common Stock offered hereby, as of February 15, 1998, the Company had
outstanding approximately 22,008,290 shares of Common Stock, options to purchase
a total of approximately 4,216,424 shares of Common Stock, 1,216,282 shares of
Common Stock reserved for future issuance under the Company's stock option and
stock purchase plans, warrants to purchase 95,122 shares of Common Stock and a
warrant to purchase 325,000 shares of the Company's Series E Preferred Stock.
The Company has in effect two shelf Registration Statements with respect to the
2,634,601 shares (as of February 15, 1998) of Common Stock held by AOL (or
issuable to AOL upon exercise of a warrant) and with respect to the 2,900,000
shares of Common Stock held by Intuit. Holders of an additional 5,391,273 shares
of Common Stock have certain rights to require the Company to register those
shares of Common Stock for offer and sale to the public. If such holders, by
exercising their registration rights or selling their shares of Common Stock
pursuant to an existing registration statement, cause a large number of shares
to be registered and sold in the public market, such sales could have a material
adverse effect on the market price for the Company's Common Stock.
19
<PAGE> 20
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, many companies' software and computer
systems may need to be upgraded or replaced in order to comply with such "Year
2000" requirements. Although the Company believes that its systems are Year 2000
compliant, the Company utilizes third-party equipment and software that may not
be Year 2000 compliant. Failure of such third-party equipment or software to
operate properly with regard to the year 2000 and thereafter could require the
Company to incur unanticipated expenses to remedy any problems, which could have
a material adverse effect on the Company's business, results of operations and
financial condition. Furthermore, the purchasing patterns of advertisers may be
affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. These expenditures may
result in reduced funds available for Web advertising or sponsorship of Web
services, which could have a material adverse effect on the Company's business,
results of operations and financial condition.
USE OF PROCEEDS
The proceeds from the sale of the Shares offered hereby will be solely
for the account of the Selling Shareholders. Accordingly, the Company will not
receive any of the proceeds from the sale of Shares by the Selling Shareholders.
20
<PAGE> 21
SELLING SHAREHOLDERS
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's Common Stock as of
February 15, 1998 by each Selling Shareholder named below. Each of the Selling
Shareholders named below was either (i) formerly a stockholder of Netbot who
acquired the shares of the Company's Common Stock offered hereby in the merger
transaction pursuant to which the Company acquired Netbot or (ii) formerly a
stockholder of MatchLogic who acquired the shares of the Company's Common Stock
in the merger transaction pursuant to which the Company acquired MatchLogic. No
Selling Shareholder has had any position, office or other material relationship
with the Company (other than in connection with the Netbot Merger or the
MatchLogic Merger) within the past three years. The following table assumes that
each Selling Shareholder sells all of the shares held by such Selling
Shareholder in this offering. However, the Company is unable to determine the
exact number of shares that will actually be sold or when or if such sales will
occur. The Company will not receive the proceeds of any shares of Common Stock
sold pursuant to this Prospectus.
In addition, certain of the Selling Shareholders are venture capital
funds, corporations or trusts which may, in the future, distribute their shares
to their partners, shareholders or trust beneficiaries, respectively, which
distributees may likewise distribute such shares to their partners, shareholders
or trust beneficiaries. Those shares may later be sold by those partners,
shareholders or trust beneficiaries, or any of their respective distributees.
The Selling Shareholders have advised the Company that each of them is
the beneficial owner (within the meaning of such term in Rule 13d-3 promulgated
under the Exchange Act) of their respective Shares being offered hereby.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Offering Owned After Offering
--------------------- --------------------
Name Number Percent Number Percent
- ---- ------ ------- ------ -------
FORMER STOCKHOLDERS OF NETBOT:
<S> <C> <C> <C> <C>
Alberg, Tom A. (1) 8,699 * - -
Alta California Partners, L.P. (2) 206,953 * - -
Alta Embarcadero Partners, LLC (3) 5,644 * - -
ARCH Venture Fund II, L.P. (4) 212,597 1.0% - -
Comdisco, Inc. (5) 10,786 * - -
Etzioni, Oren (6) 137,363 * - -
Falcon Technology Partners II, L.P. (7) 13,299 * - -
Ohio Partners, Ltd. (8) 69,138 * - -
Oki, Scott D. (9) 21,748 * - -
University of Washington (10) 32,051 * - -
Weld, Daniel (6) 137,363 * - -
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Offering Owned After Offering
--------------------- --------------------
Name Number Percent Number Percent
- ---- ------ ------- ------ -------
<S> <C> <C> <C> <C>
FORMER STOCKHOLDERS OF MATCHLOGIC:
Walter Buckley, III (11) 8,486 * - -
Data Strategies, Inc. (12) 769,662 3.5 - -
Ken Fox (11) 8,486 * - -
Stephen Getsy (11) 8,486 * - -
Internet Capital Group (13) 381,910 1.7 - -
Sequel Euro Limited Partnership (14) 185,943 * - -
Sequel Limited Partnership (15) 425,113 1.9 - -
TL Ventures III L.P. (16) 1,055,760 4.8 - -
TL Ventures III Offshore (17) 220,992 1.0 - -
TL Ventures III Interfund, L.P. (18) 34,472 * - -
Silicon Valley Bank (19) 5,727 * - -
The Wallach Company (19) 39,664 * - -
_________
</TABLE>
* Less than 1%.
(1) Includes 499 shares subject to an escrow (the "Netbot Escrow") to
secure indemnification obligations under the Agreement and Plan of
Reorganization related to the Netbot Merger.
(2) Includes 11,874 shares subject to the Netbot Escrow.
(3) Includes 323 shares subject to the Netbot Escrow.
(4) Includes 12,198 shares subject to the Netbot Escrow.
(5) Includes 499 shares subject to the Netbot Escrow and 2,087 shares
subject to a warrant.
(6) Includes 7,881 shares subject to the Netbot Escrow.
(7) Includes 763 shares subject to the Netbot Escrow.
(8) Includes 3,966 shares subject to the Netbot Escrow.
(9) Includes 1,247 shares subject to the Netbot Escrow.
(10) Includes 1,839 shares subject to the Netbot Escrow.
(11) Includes 636 shares subject to an escrow (the "MatchLogic Escrow") to
secure indemnification obligations under the Agreement and Plan of
Reorganization related to the MatchLogic Merger.
(12) Includes 57,725 shares subject to the MatchLogic Escrow.
(13) Includes 28,643 shares subject to the MatchLogic Escrow.
(14) Includes 13,946 shares subject to the MatchLogic Escrow.
(15) Includes 31,884 shares subject to the MatchLogic Escrow.
(16) Includes 76,876 shares subject to the MatchLogic Escrow and 30,751
shares subject to a warrant.
(17) Includes 16,092 shares subject to the MatchLogic Escrow and 6,435
shares subject to a warrant.
(18) Includes 2,510 shares subject to the MatchLogic Escrow and 1,004 shares
subject to a warrant.
(19) Represents shares subject to warrants.
22
<PAGE> 23
PLAN OF DISTRIBUTION
In connection with the Netbot Merger and the MatchLogic Merger, each of
the Selling Shareholders who was formerly a shareholder of Netbot or MatchLogic,
as applicable, entered into a Registration Rights Agreement (a "Registration
Rights Agreement") with the Company. The Registration Statement of which this
Prospectus forms a part has been filed pursuant to the Registration Rights
Agreements. To the Company's knowledge, no Selling Shareholder has entered into
any agreement, arrangement or understanding with any particular broker or market
maker with respect to the shares offered hereby, nor does the Company know the
identity of the brokers or market makers that will participate in the offering.
The shares of Common Stock covered hereby may be offered and sold from
time to time by the Selling Shareholders or by pledgees, donees, transferees and
other successors in interest; provided however, that the Selling Shareholders
who were former stockholders of MatchLogic have agreed with the Company that
they will not sell or dispose of any Shares until the first date on which the
Company publicly releases financial statements that include at least thirty (30)
days of post-MatchLogic Merger combined operating results of the Company and
MatchLogic. The Selling Shareholders will act independently of the Company in
making decisions with respect to the timing, manner and size of each sale. Such
sales may be made over the Nasdaq National Market or otherwise, at then
prevailing market prices, at prices related to prevailing market prices or at
negotiated prices. The Shares may be sold by one or more of the following: (a) a
block trade in which the broker-dealer engaged by the Selling Shareholder will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by the
broker-dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. The Company has been
advised by the Selling Shareholders that they have not, as of the date hereof,
entered into any arrangement with a broker-dealer for the sale of Shares through
a block trade, special offering, or secondary distribution of a purchase by a
broker-dealer. In effecting sales, broker-dealers engaged by the Selling
Shareholders may arrange for other broker-dealers to participate. Broker-dealers
will receive commissions or discounts from the Selling Shareholders in amounts
to be negotiated immediately prior to the sale. In addition, certain of the
Selling Shareholders are venture capital funds, corporations or trusts which
may, in the future, distribute their shares to their partners, shareholders or
trust beneficiaries, respectively, which distributees may likewise distribute
such shares to their partners, shareholders or trust beneficiaries. Those shares
may later be sold by those partners, shareholders or trust beneficiaries, or any
of their respective distributees.
In connection with distributions of the Shares or otherwise, the
Selling Shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the Shares registered hereunder in the course of hedging the positions they
assume with Selling Shareholders. The Selling Shareholders may also sell shares
short and redeliver the shares to close out such short positions. The Selling
Shareholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares
registered hereunder, which the broker-dealer may resell or otherwise transfer
pursuant to this Prospectus. A Selling Shareholder may also loan or pledge the
Shares registered hereunder to a broker-dealer and the broker-dealer may sell
the Shares so loaned or, upon a default, the broker-dealer may effect sales of
the pledged Shares pursuant to this Prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Shareholders in amounts to be
negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. The Selling Shareholders have agreed with
the Company in the applicable Registration Rights Agreement not to sell any of
the Shares pursuant to this Prospectus in an underwritten offering without the
Company's prior written consent. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 or Rule 145 under the
Securities Act may be sold under Rule 144 or Rule 145 rather than pursuant to
this Prospectus.
23
<PAGE> 24
All costs, expenses and fees in connection with the registration of the
shares will be borne by the Company. Commissions and discounts, if any,
attributable to the sales of the Shares will be borne by the Selling
Shareholders. The Selling Shareholders may agree to indemnify any broker-dealer
or agent that participates in transactions involving sales of the shares against
certain liabilities, including liabilities arising under the Securities Act.
Under the Agreement, the Company and the Selling Shareholders have agreed to
indemnify each other and certain other persons against certain liabilities in
connection with the offering of the shares, including liabilities arising under
the Securities Act.
The Company has advised the Selling Shareholders that the
anti-manipulation rules under the Exchange Act may apply to sales of Shares in
the market and to the activities of the Selling Shareholders and their
affiliates. The Selling Shareholders have advised the Company that during such
time as the Selling Shareholders may be engaged in the attempt to sell shares
registered hereunder, they will: (i) not engage in any stabilization activity in
connection with any of the Company's securities; (ii) not bid for or purchase
any of the Company's securities or any rights to acquire the Company's
securities, or attempt to induce any person to purchase any of the Company's
securities or rights to acquire the Company's securities other than as permitted
under the Exchange Act; (iii) not effect any sale or distribution of the Shares
until after the Prospectus shall have been appropriately amended or
supplemented, if required, to set forth the terms thereof; and (iv) effect all
sales of Shares in broker's transactions through broker-dealers acting as
agents, in transactions directly with market makers or in privately negotiated
transactions where no broker or other third party (other than the purchaser) is
involved.
Under certain circumstances, the Company has the ability to suspend the
use of this Prospectus if, in the good faith judgment of the Board of Directors
of Excite, it would be seriously detrimental to Excite and its shareholders for
resales of shares to be made due to (A) the existence of a material development
or potential material development with respect to or involving Excite which
Excite would be obligated to disclose in the Prospectus, which disclosure would
in the good faith judgment of the Board of Directors of Excite be premature or
otherwise inadvisable at such time and would have a material adverse affect upon
Excite and its shareholders, or (B) the occurrence of any event that makes any
statement made in the Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or which
requires the making of any changes in the Prospectus so that it will not contain
any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
This offering will terminate as to each Selling Shareholder on the
earlier of (a) the termination of the Effectiveness Period during which the
Company is required to maintain the effectiveness of the Registration Statement
of which this Prospectus forms a part, or (b) the date on which all Shares
offered hereby have been sold by the Selling Shareholders. There can be no
assurance that any of the Selling Shareholders will sell any or all of the
Shares of Common Stock offered hereby.
Pursuant to an Escrow Agreement between the Company and the Selling
Shareholders who were former stockholders of Netbot, a total of 48,970 of the
Shares will be held in an escrow from the closing of the Netbot Merger until the
earlier of (a) the date on which Excite has received audited financial
statements together with a report thereon from Excite's independent auditors
covering the combined results of Excite and Nebot for the first fiscal year of
Excite ending after the closing of the Netbot Merger (i.e., the year ending
December 31, 1997), for items expected to be encountered in the audit process,
provided that Excite shall have a reasonable period of time, not to exceed
ninety (90) days from the end of its fiscal year, to review the audit results to
determine if any claim for damages exists under the Agreement and Plan of
Reorganization relating to the Netbot Merger in order to secure certain
indemnification obligations of the Selling Shareholders who were former
stockholders of Netbot to the
24
<PAGE> 25
Company, and (b) six (6) months after the closing of the Netbot Merger (i.e.,
May 24, 1998) for all other items. Shares held in escrow may not be sold or
transferred without the Company's consent.
Pursuant to an Escrow Agreement between the Company and the Selling
Shareholders who were former stockholders of MatchLogic, a total of 227,074 of
the Shares will be held in escrow from the closing of the MatchLogic Merger
until the earlier of (a) the date on which Excite has received audited financial
statements together with a report thereon from Excite's independent auditors
covering the combined results of Excite and MatchLogic for the first fiscal year
of Excite ending after the closing of the MatchLogic Merger (i.e., the year
ending December 31, 1998), for items expected to be encountered in the audit
process, provided that Excite shall have until March 31, 1999 to review the
audit results to determine if any claim for damages exists under the Agreement
and Plan of Reorganization relating to the MatchLogic Merger in order to secure
certain indemnification obligations of the Selling Shareholders who were former
stockholders of MatchLogic to the Company, and (b) twelve (12) months after the
closing MatchLogic Merger (i.e., February 3, 1999). Shares held in escrow may
not be sold or transferred without the Company's consent.
The Company has agreed to pay the expenses of registering the Shares
under the Securities Act, including registration and filing fees, printing
expenses, administrative expenses and certain legal and accounting fees. Each of
the Selling Shareholders will bear their pro rata share of all discounts,
commissions or other amounts payable to underwriters, dealers or agents as well
as fees and disbursements for legal counsel retained by any such Selling
Shareholder.
The Company and the Selling Shareholders have agreed to indemnify each
other and certain other related parties for certain liabilities in connection
with the registration of the Shares offered hereby.
Upon the occurrence of any of the following events, this Prospectus
will be amended to include additional disclosure before offers and sales of the
securities in question are made: (a) to the extent the securities are sold at a
fixed price or at a price other than the prevailing market price, such price
would be set forth in the Prospectus, (b) if the securities are sold in block
transactions and the purchaser acting in the capacity of an underwriter wishes
to resell, such arrangements would be described in the Prospectus, (c) if a
Selling Shareholder sells to a broker-dealer acting in the capacity as an
underwriter, such broker-dealer will be identified in the Prospectus and (d) if
the compensation paid to broker-dealers is other than usual and customary
discounts, concessions or commissions, disclosure of the terms of the
transaction would be included in the Prospectus.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Fenwick & West LLP, Two Palo Alto
Square, Palo Alto, California 94306. Members of Fenwick & West LLP own an
aggregate of 10,823 shares of Common Stock of the Company.
EXPERTS
The consolidated financial statements of Excite, Inc. incorporated by
reference in this Prospectus by reference from the annual report (Form 10-K, as
amended by Form 10-K/A) of Excite, Inc. for the year ended December 31, 1996,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. The
report as to the years 1995 and 1994 is based in part on the report of Price
Waterhouse LLP, independent accountants. The financial statements referred to
above are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
25
<PAGE> 26
================================================================================
EXCITE, INC.
3,998,258 Shares of
Common Stock
--------------------
PROSPECTUS
--------------------
================================================================================
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The aggregate estimated expenses to be paid by the Registrant in
connection with this offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee..........................................$ 50,128.16
Accounting fees and expenses................................................................. 5,000.00
Legal fees and expenses...................................................................... 30,000.00
Miscellaneous................................................................................ 14,871.84
Total...................................................................................$100,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation include a provision that
eliminates the personal liability of its directors to the Registrant and its
shareholders for monetary damages for breach of the directors' fiduciary duties
to the fullest extent permitted by law. This limitation has no effect on a
director's liability (i) for acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) for acts or
omissions that a director believes to be contrary to the best interests of the
Registrant or its shareholders or that involve the absence of good faith on the
part of the director, (iii) for any transaction from which a director derived an
improper personal benefit, (iv) for acts or omissions that show a reckless
disregard for the director's duty to the Registrant or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of a serious injury
to the Registrant or its shareholders, (v) for acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of the
director's duty to the Registrant or its shareholders, (vi) under Section 310 of
the California Corporations Code (the "California Code") (concerning contracts
or transactions between the Registrant and a director) or (vii) under Section
316 of the California Code (concerning directors' liability for improper
dividends, loans and guarantees). The provision does not extend to acts or
omissions of a director in his capacity as an officer. Further, the provision
will not affect the availability of injunctions and other equitable remedies
available to the Registrant's shareholders for any violation of a director's
fiduciary duty to the Registrant or its shareholders.
The Registrant's Articles of Incorporation also include an
authorization for the Registrant to indemnify its agents (as defined in Section
317 of the California Code), through bylaw provisions, by agreement or
otherwise, to the fullest extent permitted by law. Pursuant to this latter
provision, the Registrant's Bylaws provide for indemnification of the
Registrant's directors and officers. In addition, the Registrant, at its
discretion, may provide indemnification to persons whom the Registrant is not
obligated to indemnify. The Bylaws also allow the Registrant to enter into
indemnity agreements with individual directors, officers, employees and other
agents. These indemnity agreements have been entered into with all directors and
provide the maximum indemnification permitted by law. These agreements, together
with the Registrant's Bylaws and Articles of Incorporation, may require the
Registrant, among other things, to indemnify such directors against certain
liabilities that may arise by reason of their status or service as directors
(other than liabilities resulting from willful misconduct of a culpable nature),
to advance expenses to them as they are incurred, provided that they undertake
to repay
II-1
<PAGE> 28
the amount advanced if it is ultimately determined by a court that they are not
entitled to indemnification, and to obtain directors' and officers' insurance if
available on reasonable terms.
Section 317 of the California Code and the Registrant's Bylaws make
provision for the indemnification of officers, directors and other corporate
agents in terms sufficiently broad to indemnify such persons, under certain
circumstances for liabilities (including reimbursement of expenses incurred)
arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
The Registrant has directors and officers liability insurance with a
per claim and annual aggregate coverage limit of $5,000,000.
II-2
<PAGE> 29
ITEM 16. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made pursuant to this Registration Statement, a post-effective amendment
to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement (notwithstanding the foregoing, any increase or
decrease in volume or securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement); and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement; provided, however,
that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective
amendment by paragraphs (1)(i) or (1)(ii) is contained in any
periodic report filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 30
ITEM 17. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------ -------------
<S> <C> <C>
2.01 - Agreement and Plan of Reorganization, dated as of January 15, 1998, by and among the
Registrant, XCite Acquisition Corporation, Matchlogic, TL Ventures III, L.P., TL Ventures
III Offshore, TL Ventures III Interfund L.P., Sequel Limited Partnership, Sequel Euro
Limited Partnership, Internet Capital Group, L.L.C., Data Strategies, Inc. and Gary
Anderson.(1)
2.02 - Agreement and Plan of Reorganization, dated October 30, 1997, by and among the Registrant,
Excite Merger Corporation, Netbot, Eric Zochner and Dan Campi.(2)
3.01 - Articles of Incorporation of Registrant, as amended.(3)
4.01 - Form of Specimen Certificate for Registrant's Common Stock.(4)
4.02 - Bylaws of Registrant, as amended.(5)
4.03 - Registration Rights Agreement, dated as of February 3, 1998, by and between the Registrant
and the stockholders and the holders of issued and outstanding warrants of Matchlogic.
4.04 - Registration Rights Agreement, dated as of October 30, 1997, by and between the Registrant
and the parties listed on Exhibit A thereto.
5.01 - Opinion of Fenwick & West LLP.*
23.01 - Consent of Fenwick & West LLP (included in Exhibit 5.01).*
23.02 - Consent of Ernst & Young LLP, Independent Auditors.
23.03 - Consent of Price Waterhouse LLP, Independent Accountants.
24.01 - Power of Attorney (see page II-5).
</TABLE>
- ----------------
* To be filed by amendment.
(1) Previously filed with the Commission on February 17, 1998 as an exhibit
to the Registrant's Form 8-K (File No. 000-28064).
(2) Previously filed with the Commission on December 4, 1997 as an exhibit
to the Registrant's Form 8-K (File No. 000-28064).
(3) Previously filed with the Commission on July 3, 1996 as an exhibit to
the Registrant's Registration Statement on Form S-8 (File No.
333-07625).
(4) Previously filed with the Commission on March 29, 1996 as an exhibit to
Amendment No. 1 to the Registrant's Registration Statement on Form SB-2
(File No. 333-2328-LA).
(5) Previously filed with the Commission on March 11, 1996 as an exhibit to
the Registrant's Registration Statement on Form SB-2 (File No.
333-2328-LA).
II-4
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all for the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Redwood City, State of California, on the 24th day
of February, 1998.
EXCITE INC.
By: /s/ ROBERT C. HOOD
----------------------------------
Robert C. Hood
Executive Vice President, Chief
Administrative and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Robert C. Hood and Richard Redding, and each of
them, his attorneys-in-fact and agents, each with the power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- --------- ----- ----
PRINCIPAL EXECUTIVE OFFICER:
/s/ GEORGE BELL President, Chief Executive February 24, 1998
- ------------------------------------ Officer and Director
George Bell
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ ROBERT C. HOOD Executive Vice President, Chief February 24, 1998
- ------------------------------------ Administrative Officer and
Robert C. Hood Chief Financial Officer
</TABLE>
II-5
<PAGE> 32
<TABLE>
<S> <C> <C>
ADDITIONAL DIRECTORS:
/s/ JOSEPH R. KRAUS Senior Vice President and February 24, 1998
- ------------------------------------ Director
Joseph R. Kraus
Director
- ------------------------------------
Vinod Khosla
/s/ DONN DAVIS Director February 24, 1998
- ------------------------------------
Donn Davis
/s/ GEOFFREY Y. YANG Director February 24, 1998
- ------------------------------------
Geoffrey Y. Yang
</TABLE>
II-6
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------ -------------
<S> <C> <C>
2.01 - Agreement and Plan of Reorganization, dated as of January 15, 1998, by and among the
Registrant, XCite Acquisition Corporation, Matchlogic, TL Ventures III, L.P., TL Ventures
III Offshore, TL Ventures III Interfund L.P., Sequel Limited Partnership, Sequel Euro
Limited Partnership, Internet Capital Group, L.L.C., Data Strategies, Inc. and Gary
Anderson.(1)
2.02 - Agreement and Plan of Reorganization, dated October 30, 1997, by and among the Registrant,
Excite Merger Corporation, Netbot, Eric Zochner and Dan Campi.(2)
3.01 - Articles of Incorporation of Registrant, as amended.(3)
4.01 - Form of Specimen Certificate for Registrant's Common Stock.(4)
4.02 - Bylaws of Registrant, as amended.(5)
4.03 - Registration Rights Agreement, dated as of February 3, 1998, by and between the Registrant
and the stockholders and the holders of issued and outstanding warrants of Matchlogic.
4.04 - Registration Rights Agreement, dated as of October 30, 1997, by and between the Registrant
and the parties listed on Exhibit A thereto.
5.01 - Opinion of Fenwick & West LLP.*
23.01 - Consent of Fenwick & West LLP (included in Exhibit 5.01).*
23.02 - Consent of Ernst & Young LLP, Independent Auditors.
23.03 - Consent of Price Waterhouse LLP, Independent Accountants.
24.01 - Power of Attorney (see page II-5).
</TABLE>
- ----------------
* To be filed by amendment.
(1) Previously filed with the Commission on February 17, 1998 as an exhibit
to the Registrant's Form 8-K (File No. 000-28064).
(2) Previously filed with the Commission on December 4, 1997 as an exhibit
to the Registrant's Form 8-K (File No. 000-28064).
(3) Previously filed with the Commission on July 3, 1996 as an exhibit to
the Registrant's Registration Statement on Form S-8 (File No.
333-07625).
(4) Previously filed with the Commission on March 29, 1996 as an exhibit to
Amendment No. 1 to the Registrant's Registration Statement on Form SB-2
(File No. 333-2328-LA).
(5) Previously filed with the Commission on March 11, 1996 as an exhibit to
the Registrant's Registration Statement on Form SB-2 (File No.
333-2328-LA).
<PAGE> 1
EXHIBIT 4.03
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of February 3, 1998 (the "EFFECTIVE DATE") by and between
Excite, Inc., a California corporation ("EXCITE") and the persons and entities
listed on Exhibit A hereby who immediately prior to the Effective Time of the
Merger (as defined below) are: (i) all of the stockholders (collectively, the
"SHAREHOLDERS" and each individually a "SHAREHOLDER") of MatchLogic, Inc., a
Delaware corporation ("MatchLogic"), and (ii) all of the holders of issued and
outstanding warrants of MatchLogic (collectively, the "WARRANTHOLDERS" and each
individually as "WARRANTHOLDER").
R E C I T A L S
A. MatchLogic, Excite and Xcite Acquisition Corporation ("MERGER SUB")
have entered into an Agreement and Plan of Reorganization (the "PLAN") dated as
of January 15, 1998, pursuant to which Merger Sub will merge with and into
MatchLogic in a reverse triangular merger with MatchLogic to be the surviving
corporation of the Merger (the "MERGER").
B. As a condition precedent to the consummation of the Merger, Section
1.5.1 of the Plan provides that the Shareholders and Warrantholders shall be
granted certain registration rights with respect to the shares of Excite's
Common Stock that are issued to the Shareholders in the Merger or which are
issuable upon exercise of assumed warrants (the "MERGER SHARES"), subject to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. REGISTRATION RIGHTS.
1.1 Definitions. For purposes of this Section 1:
(a) Registration. The terms "REGISTER," "REGISTERED,"
and "REGISTRATION" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "1933 ACT"), and the declaration or ordering of effectiveness of such
registration statement.
(b) Registrable Securities. The term "REGISTRABLE
SECURITIES" means: (1) all of the Merger Shares, and (2) any shares of Common
Stock of Excite issued as a dividend or other distribution with respect to, or
in exchange for or in replacement of, the Merger Shares; excluding in all cases,
however, (i) any Registrable Securities sold by a person in a transaction in
which rights under this Section 1 are not assigned in accordance with Section 2
of this Agreement, (ii) any Registrable Securities sold in a public offering
pursuant to a registration statement filed with the SEC or sold to the public
pursuant to Rule 144 promulgated under the 1933 Act ("RULE 144"); or (iii) all
of the Registrable Securities of any Holder if all of such Registrable
Securities with respect to such Holder may be sold in the public market in a
three-month period without registration under the 1933 Act pursuant to Rule 144.
<PAGE> 2
(c) Prospectus. The term "PROSPECTUS" shall mean the
prospectus included in any Registration Statement filed pursuant to the
provisions hereof (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the 1933
Act), as amended or supplemented by any prospectus supplement (including,
without limitation, any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement), and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
(d) Holder. For purposes of this Agreement, the term
"HOLDER" means any person owning of record Registrable Securities.
(e) SEC. The term "SEC" or "COMMISSION" means the
U.S. Securities and Exchange Commission.
1.2 Registration.
(a) Initial Registration. Excite shall prepare and
file with the SEC within ninety (90) days following the Closing (as defined in
the Plan), and use its best efforts to have declared effective as soon as
practicable thereafter, a registration statement (a "REGISTRATION STATEMENT")
providing for the resale by the Holders of all of the Registrable Securities
then owned (or to be owned upon exercise of warrants) by the Holders. Excite
shall use its best efforts to keep the Registration Statement continuously
effective, pursuant to the rules, regulations or instructions under the 1933 Act
applicable to the registration statement used by Excite for such Registration
Statement, for such period (the "EFFECTIVENESS PERIOD") ending on the date when
the Registrable Securities cease to meet the definition of Registrable
Securities pursuant to Section 1.1(b).
(b) Suspension. If Excite shall determine pursuant to
the good faith judgment of the Board of Directors of Excite, that it would be
seriously detrimental to Excite and its shareholders for resales of Registrable
Securities to be made pursuant to the Registration Statement, due to (A) the
existence of a material development or potential material development with
respect to or involving Excite which Excite would be obligated to disclose in
the Prospectus contained in the Registration Statement, which disclosure would
in the good faith judgment of the Board of Directors of Excite be premature or
otherwise inadvisable at such time and would have a material adverse affect upon
Excite and its shareholders, or (B) the occurrence of any event that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in the
Registration Statement or Prospectus so that it will not contain any untrue
statement of a material fact required to be stated therein or necessary to make
the statements therein not misleading or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, then
Excite shall deliver a certificate in writing to the Holders to the effect of
the foregoing and, upon receipt of such certificate, the use of the Registration
Statement and Prospectus will be deferred or suspended and will not recommence
until (1) such Holder's receipt from Excite of copies of the supplemented or
2
<PAGE> 3
amended Prospectus, or (2) such Holders are advised in writing by Excite that
the Prospectus may be used. Excite will use its best efforts to ensure that the
use of the Registration Statement and Prospectus may be resumed, as soon as
practicable and, in the case of a pending development or event referred to in
(A) above, as soon, in the judgment of Excite, as disclosure of the material
information relating to such pending development would not have a materially
adverse effect on Excite's ability to consummate the transaction, if any, to
which such development relates. Notwithstanding the foregoing or any other
provision of this Agreement, the period during which Excite shall be required to
maintain the effectiveness of the Registration Statement shall be extended by
one (1) day for each full or partial day during which the use of such
Registration Statement or Prospectus is deferred or suspended by Excite in
accordance with this Section 1.2(b).
(c) Expenses. All reasonable expenses, other than
underwriting discounts and brokers commissions, incurred in connection with the
Registration Statement shall be borne by Excite.
1.3 Obligations of Excite. Excite shall, as expeditiously as
reasonably possible:
(a) Prepare promptly and file with the SEC the
Registration Statement as provided in Section 1.2(a), which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading and cause such Registration Statement to become effective
as soon as practicable.
(b) Prepare promptly and file with the SEC such
amendments and supplements to such Registration Statement and the Prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration statement.
(c) Furnish to Holders such number of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as reasonably requested
in order to facilitate the disposition of the Registrable Securities owned by it
that are included in such registration.
(d) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Holders,
provided that Excite shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Notify Holders promptly (i) of any request by the
SEC or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to
such Registration Statement or related prospectus or for additional information,
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
3
<PAGE> 4
Statement or the initiation of any proceedings for that purpose, (iii) of the
receipt by Excite of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (iv) of the happening of any event which makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the Registration
Statement or Prospectus so that it will not contain any untrue statement of a
material fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (v) of Excite's determination that a post-effective amendment to
the Registration Statement would be appropriate.
1.4 Furnish Information. It shall be a condition precedent to
the obligations of Excite to take any action pursuant to Section 1.2 that each
Holder shall furnish to Excite such information regarding Holder, the
Registrable Securities held by Holder, and the intended method of disposition of
such securities as shall be required to timely effect the registration of
Holder's Registrable Securities.
1.5 Indemnification
(a) By Excite. To the extent permitted by law, Excite
will indemnify and hold harmless each of the Holders, officers and directors,
employees and agents of a Holder or underwriter (as defined in the 1933 Act) and
each person, if any, who controls a Holder within the meaning of the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 ACT"), against any losses,
claims, damages, or liabilities (joint or several) to which they or any of them
may become subject under the 1933 Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus
contained therein or in any amendments or supplements thereto;
(ii) the omission or alleged omission to state in the
Registration Statement, including any preliminary prospectus
or final prospectus contained therein or in any amendments or
supplements thereto, a material fact required to be stated
therein, or necessary to make the statements therein not
misleading; or
(iii) any violation or alleged violation by Excite of
the 1933 Act, the 1934 Act, any federal or state securities
law or any rule or regulation promulgated under the 1933 Act,
the 1934 Act or any federal or state securities law in
connection with the offering covered by such Registration
Statement.
4
<PAGE> 5
Excite will reimburse each Holder, such officer, director, employee or agent,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this subsection 1.5(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Excite (which consent
shall not be unreasonably withheld), nor shall Excite be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by Holder, or by such, officer, director, employee,
agent, underwriter or controlling person of any Holder.
(b) By Holders. To the extent permitted by law, each
Holder will indemnify and hold harmless Excite, each of its directors, each of
its officers who have signed the Registration Statement, each person, if any,
who controls Excite within the meaning of the 1933 Act, any other employee or
agent of Excite, each other Holder, each person, if any, who controls such
Holder within the meaning of the 1933 Act, and any other employee or agent of
such Holder, against any losses, claims, damages or liabilities (joint or
several) to which Excite or any such director, officer, or controlling person,
employee or agent may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such Registration Statement; and
such Holder will reimburse any legal or other expenses reasonably incurred by
Excite or any such director, officer, or controlling person, employee or agent
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.5(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder, which consent shall not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity by
Holder under this Section 1.5(b) in respect of any Violation shall not exceed
the net proceeds received by Holder in the registered offering out of which such
Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 1.5 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section 1.5, deliver to the indemnifying party a written notice of
the commencement of such an action and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
5
<PAGE> 6
such action, if prejudicial to its ability to defend such action, shall (to the
extent of such prejudice) relieve such indemnifying party of any liability to
the indemnified party under this Section 1.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 1.5.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of Excite and such Holders are subject to the
condition that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the Registration Statement becomes effective or in the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "FINAL
PROSPECTUS"), such indemnity agreements shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the 1933 Act.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the 1933 Act in any case in
which either (i) Holder (and/or any officer, director, employee, agent,
underwriter or controlling person who may be indemnified under Section 1.5(a)),
makes a claim for indemnification pursuant to this Section 1.5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 1.5 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of such Holder (and/or any officer, director, employee, agent, underwriter or
controlling person who may be indemnified under Section 1.5 (a)) in
circumstances for which indemnification is provided under this Section 1.5;
then, and in each such case, Excite and such Holder (and/or such other person)
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in proportion to their
relative fault as determined by a court of competent jurisdiction; provided
however, that in no event, except in instances of intentional fraud by the
Holder in which case there is no limitation, (i) shall any Holder be responsible
for more than the portion represented by the percentage that the public offering
price of its Registrable Securities offered by and sold under the Registration
Statement bears to the public offering price of all securities offered by and
sold under such Registration Statement or (ii) shall a Holder be required to
contribute any amount in excess of the public offering price of all such
securities offered and sold by such Holder pursuant to such Registration
Statement; and in any event, no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(f) Survival. The obligations of Excite and such
Holder under this Section 1.5 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
6
<PAGE> 7
1.6 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it shall not, to the extent requested in writing by Excite or the managing
underwriter(s) (who shall be nationally recognized) of securities of Excite and
in connection with an underwritten public offering of securities of Excite with
gross proceeds to Excite of at least Twenty Million Dollars ($20,000,000), sell
or otherwise transfer or dispose of any Registrable Securities or any shares of
capital stock of Excite then owned by such Holder (with the exception of 150,000
shares total from all Holders and other than to donees or partners of the Holder
who agree to be similarly bound) for up to ninety (90) days following the
effective date of the Registration Statement for such underwritten offering;
provided, however, that such agreement shall not apply:
(a) to a Holder who beneficially owns less than one
and one-half percent (1 1/2%) of the outstanding Common Stock of Excite; and
(b) unless all Excite officers, directors, key
employees and beneficial owners then holding at least one and one-half percent
(1 1/2%) of Excite's outstanding Common Stock enter into identical lock-up
agreements.
In order to enforce the foregoing covenant, Excite shall have
the right to place restrictive legends on the certificates representing the
shares subject to this Section and to impose stop transfer instructions with
respect to the shares of stock of each Holder (and the shares or securities of
every other person subject to the foregoing restriction).
2. ASSIGNMENT.
2.1 Assignment. Notwithstanding anything herein to the
contrary, the registration rights of a Holder under Section 1 hereof may be
assigned only to (x) a party who acquires from Holder at least One Hundred
Thousand (100,000) shares of Common Stock that constitute the original number of
Registrable Securities (as such number may be adjusted to reflect subdivisions,
combinations and stock dividends of Excite's Common Stock), (y) or as a
distribution made by a Holder which is a partnership to the partners of such
Holder of Registrable Securities, or (z) to any parent corporation holding
majority voting control or to any wholly-owned corporate subsidiary where such
Holder is a corporation; provided, however that no party may be assigned any of
the foregoing rights until Excite is given written notice by the assigning party
at the time of such assignment stating the name and address of the assignee and
identifying the securities of Excite as to which the rights in question are
being assigned; provided, further that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 2.
3. GENERAL PROVISIONS.
3.1 Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if deposited in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
<PAGE> 8
(a) if to Excite, at:
Excite, Inc.
555 Broadway
Redwood City, CA 94063
Attention: Chief Financial Officer
Facsimile: 650/568-6039
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Mark Stevens, Esq.
Facsimile: 650/494-1417
(b) If to Holders:
To the address set forth on Exhibit A hereto
with a copy to:
Cooley Godward LLP
2595 Canyon Boulevard, Suite 250
Boulder, CO, 80302-6737
Attention: James H. Carroll, Esq.
Facsimile: 303/546-4099
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or when
deposited in the mail in the manner set forth above.
3.2 Entire Agreement. This Agreement and the Plan constitute
and contains the entire agreement and understanding of the parties with respect
to the subject matter hereof and supersede any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof.
3.3 Amendment of Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of Excite and Holders of a majority of all Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this Section 3.3 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and Excite.
3.4 Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the laws of the State of California,
excluding that body of law relating to conflict of laws.
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3.5 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
3.6 Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties hereto
and their successors and assigns, any rights or remedies under or by reason of
this Agreement.
3.7 Successors And Assigns. Subject to the provisions of
Section 2.1, the provisions of this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and permitted assigns of the parties
hereto.
3.8 Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
3.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.10 Costs And Attorneys' Fees. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
Agreement or any transaction contemplated hereunder, the prevailing party shall
recover all of such party's costs and attorneys' fees incurred in each such
action, suit or other proceeding, including any and all appeals or petitions
therefrom.
3.11 Legends.
Each Holder understands that prior to the effectiveness of the
Registration Statement certificates or other instruments representing any of the
Registrable Securities acquired by Holder will bear legends substantially
similar to the following, in addition to any other legends required by federal
or state laws:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE
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<PAGE> 10
IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
Each Holder agrees that, in order to ensure and enforce
compliance with the restrictions imposed by applicable law and those referred to
in the foregoing legends, or elsewhere herein, Excite may, prior to the
effectiveness of the Registration Statement issue appropriate "stop transfer"
instructions to its transfer agent, if any, with respect to any certificate or
other instrument representing Registrable Securities, or if Excite transfers its
own securities, that it may make appropriate notations to the same effect in
Excite's records.
Each Holder also understands that subsequent to the
effectiveness of the Registration Statement, upon the written request of a
Holder, the Holder may surrender the certificates or other instruments
representing any of the Registrable Securities and Excite will, as promptly as
practicable, cause the legend described above to be replaced with a legend
substantially similar to the following (in addition to any other legends
required by state laws):
THE RESALE OF THE SHARES REPRESENTED HEREBY MAY BE MADE ONLY
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT
TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT BETWEEN EXCITE
AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF EXCITE.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
EXCITE, INC. SHAREHOLDERS:
By: /s/ Robert C. Hood By:
---------------------------- ---------------------------------------
Title: EVP - CFO
Name:
-------------------------------------
Title:
------------------------------------
WARRANTHOLDERS:
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
11
<PAGE> 1
EXHIBIT 4.04
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of October 30, 1997 (the "EFFECTIVE DATE") by and between
EXCITE, INC., a California corporation ("EXCITE") and the persons and entities
listed on Exhibit A hereby (collectively, the "SHAREHOLDERS" and each
individually a "SHAREHOLDER") who immediately prior to the Effective Time of the
Merger (as defined below) are all of the stockholders of Netbot, Incorporated, a
Delaware corporation ("NETBOT").
R E C I T A L S
A. Netbot, Excite and Excite Merger Corporation ("SUB") have entered
into an Agreement and Plan of Reorganization (the "PLAN") dated as of October
23, 1997, pursuant to which Sub will merge with and into Netbot in a reverse
triangular merger with Netbot to be the surviving corporation of the Merger (the
"MERGER").
B. As a condition precedent to the consummation of the Merger, Section
1.5.1 of the Plan provides that the Shareholders shall be granted certain
registration rights with respect to the shares of Excite's Common Stock that are
issued to the Shareholders in the Merger or which are issuable upon exercise of
assumed warrants (the "MERGER SHARES"), subject to the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. REGISTRATION RIGHTS.
1.1 Definitions. For purposes of this Section 1:
(a) Registration. The terms "REGISTER," "REGISTERED,"
and "REGISTRATION" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "1933 ACT"), and the declaration or ordering of effectiveness of such
registration statement.
(b) Registrable Securities. The term "REGISTRABLE
SECURITIES" means: (1) all of the Merger Shares, and (2) any shares of Common
Stock of Excite issued as a dividend or other distribution with respect to, or
in exchange for or in replacement of, the Merger Shares; excluding in all cases,
however, (i) any Registrable Securities sold by a person in a transaction in
which rights under this Section 1 are not assigned in accordance with Section 2
of this Agreement, (ii) any Registrable Securities sold in a public offering
pursuant to a registration statement filed with the SEC or sold to the public
pursuant to Rule 144 promulgated under the 1933 Act ("RULE 144"); or (iii) any
Registrable Securities which may be sold in the public market in a three-month
period without registration under the 1933 Act pursuant to Rule 144.
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(c) Prospectus. The term "PROSPECTUS" shall mean the
prospectus included in any Registration Statement filed pursuant to the
provisions hereof (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the 1933
Act), as amended or supplemented by any prospectus supplement (including,
without limitation, any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement), and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
(d) Holder. For purposes of this Agreement, the term
"HOLDER" means any person owning of record Registrable Securities.
(e) SEC. The term "SEC" or "COMMISSION" means the
U.S. Securities and Exchange Commission.
1.2 Registration.
(a) Initial Registration. Excite shall prepare and
file with the SEC within ninety (90) days following the Closing (as defined in
the Plan), and use its best efforts to have declared effective as soon as
practicable thereafter, a registration statement (a "REGISTRATION STATEMENT")
providing for the resale by the Holders of all of the Registrable Securities
then owned (or to be owned upon exercise of warrants) by the Holders. Excite
shall use its best efforts to keep the Registration Statement continuously
effective, pursuant to the rules, regulations or instructions under the 1933 Act
applicable to the registration statement used by Excite for such Registration
Statement, for such period (the "EFFECTIVENESS PERIOD") ending on the date that
is two (2) years after the date of the Closing or such shorter period ending
when the Registrable Securities cease to meet the definition of Registrable
Securities pursuant to Section 1.1(b).
(b) Suspension. If Excite shall determine pursuant to
the good faith judgment of the Board of Directors of Excite, that it would be
seriously detrimental to Excite and its shareholders for resales of Registrable
Securities to be made pursuant to the Registration Statement, due to (A) the
existence of a material development or potential material development with
respect to or involving Excite which Excite would be obligated to disclose in
the Prospectus contained in the Registration Statement, which disclosure would
in the good faith judgment of the Board of Directors of Excite be premature or
otherwise inadvisable at such time and would have a material adverse affect upon
Excite and its shareholders, or (B) the occurrence of any event that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in the
Registration Statement or Prospectus so that it will not contain any untrue
statement of a material fact required to be stated therein or necessary to make
the statements therein not misleading or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, then
Excite shall deliver a certificate in writing to the Holders to the effect of
the foregoing and, upon receipt of such certificate, the use of the Registration
Statement and Prospectus will be deferred or suspended and will not
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<PAGE> 3
recommence until (1) such Holder's receipt from Excite of copies of the
supplemented or amended Prospectus, or (2) such Holders are advised in writing
by Excite that the Prospectus may be used. Excite will use its best efforts to
ensure that the use of the Registration Statement and Prospectus may be resumed,
as soon as practicable and, in the case of a pending development or event
referred to in (A) above, as soon, in the judgment of Excite, as disclosure of
the material information relating to such pending development would not have a
materially adverse effect on Excite's ability to consummate the transaction, if
any, to which such development relates. Notwithstanding the foregoing or any
other provision of this Agreement, the period during which Excite shall be
required to maintain the effectiveness of the Registration Statement shall be
extended by one (1) day for each full or partial day during which the use of
such Registration Statement or Prospectus is deferred or suspended by Excite in
accordance with this Section 1.2(b).
(c) Expenses. All reasonable expenses, other than
underwriting discounts and brokers commissions, incurred in connection with the
Registration Statement shall be borne by Excite.
1.3 Obligations of Excite. Excite shall, as expeditiously as
reasonably possible:
(a) Prepare promptly and file with the SEC the
Registration Statement as provided in Section 1.2(a), which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading and cause such Registration Statement to become effective
as soon as practicable.
(b) Prepare promptly and file with the SEC such
amendments and supplements to such Registration Statement and the Prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration statement.
(c) Furnish to Holders such number of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as reasonably requested
in order to facilitate the disposition of the Registrable Securities owned by it
that are included in such registration.
(d) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Holders,
provided that Excite shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Notify Holders promptly (i) of any request by the
SEC or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to
such Registration Statement or related prospectus or for additional information,
(ii) of the issuance by the SEC or any other federal or state
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<PAGE> 4
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(iii) of the receipt by Excite of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (iv) of the happening of any
event which makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or which requires the making of any changes in
the Registration Statement or Prospectus so that it will not contain any untrue
statement of a material fact required to be stated therein or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (v) of Excite's determination that a post-effective
amendment to the Registration Statement would be appropriate.
1.4 Furnish Information. It shall be a condition precedent to
the obligations of Excite to take any action pursuant to Section 1.2 that each
Holder shall furnish to Excite such information regarding Holder, the
Registrable Securities held by Holder, and the intended method of disposition of
such securities as shall be required to timely effect the registration of
Holder's Registrable Securities.
1.5 Indemnification
(a) By Excite. To the extent permitted by law, Excite
will indemnify and hold harmless each of the Holders, officers and directors,
employees and agents of a Holder or underwriter (as defined in the 1933 Act) and
each person, if any, who controls a Holder within the meaning of the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 ACT"), against any losses,
claims, damages, or liabilities (joint or several) to which they or any of them
may become subject under the 1933 Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus
contained therein or in any amendments or supplements thereto;
(ii) the omission or alleged omission to state in the
Registration Statement, including any preliminary prospectus
or final prospectus contained therein or in any amendments or
supplements thereto, a material fact required to be stated
therein, or necessary to make the statements therein not
misleading; or
(iii) any violation or alleged violation by Excite of
the 1933 Act, the 1934 Act, any federal or state securities
law or any rule or regulation promulgated under the 1933 Act,
the 1934 Act or any federal or state securities law in
connection with the offering covered by such Registration
Statement.
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Excite will reimburse each Holder, such officer, director, employee or agent,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this subsection 1.5(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Excite (which consent
shall not be unreasonably withheld), nor shall Excite be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by Holder, or by such, officer, director, employee,
agent, underwriter or controlling person of any Holder.
(b) By Holders. To the extent permitted by law, each
Holder will indemnify and hold harmless Excite, each of its directors, each of
its officers who have signed the Registration Statement, each person, if any,
who controls Excite within the meaning of the 1933 Act, any other employee or
agent of Excite, each other Holder, each person, if any, who controls such
Holder within the meaning of the 1933 Act, and any other employee or agent of
such Holder, against any losses, claims, damages or liabilities (joint or
several) to which Excite or any such director, officer, or controlling person,
employee or agent may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such Registration Statement; and
such Holder will reimburse any legal or other expenses reasonably incurred by
Excite or any such director, officer, or controlling person, employee or agent
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.5(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder, which consent shall not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity by
Holder under this Section 1.5(b) in respect of any Violation shall not exceed
the net proceeds received by Holder in the registered offering out of which such
Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 1.5 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section 1.5, deliver to the indemnifying party a written notice of
the commencement of such an action and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
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such action, if prejudicial to its ability to defend such action, shall (to the
extent of such prejudice) relieve such indemnifying party of any liability to
the indemnified party under this Section 1.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 1.5.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of Excite and such Holders are subject to the
condition that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the Registration Statement becomes effective or in the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "FINAL
PROSPECTUS"), such indemnity agreements shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the 1933 Act.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the 1933 Act in any case in
which either (i) Holder (and/or any officer, director, employee, agent,
underwriter or controlling person who may be indemnified under Section 1.5(a)),
makes a claim for indemnification pursuant to this Section 1.5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 1.5 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of such Holder (and/or any officer, director, employee, agent, underwriter or
controlling person who may be indemnified under Section 1.5 (a)) in
circumstances for which indemnification is provided under this Section 1.5;
then, and in each such case, Excite and such Holder (and/or such other person)
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in proportion to their
relative fault as determined by a court of competent jurisdiction; provided
however, that in no event, except in instances of intentional fraud by the
Holder in which case there is no limitation, (i) shall any Holder be responsible
for more than the portion represented by the percentage that the public offering
price of its Registrable Securities offered by and sold under the Registration
Statement bears to the public offering price of all securities offered by and
sold under such Registration Statement or (ii) shall a Holder be required to
contribute any amount in excess of the public offering price of all such
securities offered and sold by such Holder pursuant to such Registration
Statement; and in any event, no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(f) Survival. The obligations of Excite and such
Holder under this Section 1.5 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
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1.6 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it shall not, to the extent requested in writing by Excite or the managing
underwriter(s) (who shall be nationally recognized) of securities of Excite and
in connection with an underwritten public offering of securities of Excite with
gross proceeds to Excite of at least Twenty Million Dollars ($20,000,000), sell
or otherwise transfer or dispose of any Registrable Securities or any shares of
capital stock of Excite then owned by such Holder (with the exception of 150,000
shares total from all Holders and other than to donees or partners of the Holder
who agree to be similarly bound) for up to ninety (90) days following the
effective date of the Registration Statement for such underwritten offering;
provided, however, that such agreement shall not apply:
(a) to a Holder who beneficially owns less than one
and one-half percent (1 1/2%) of the outstanding Common Stock of Excite; and
(b) unless all Excite officers, directors, key
employees and beneficial owners then holding at least one and one-half percent
(1 1/2%) of Excite's outstanding Common Stock enter into identical lock-up
agreements.
In order to enforce the foregoing covenant, Excite shall have
the right to place restrictive legends on the certificates representing the
shares subject to this Section and to impose stop transfer instructions with
respect to the shares of stock of each Holder (and the shares or securities of
every other person subject to the foregoing restriction).
2. ASSIGNMENT.
2.1 Assignment. Notwithstanding anything herein to the
contrary, the registration rights of a Holder under Section 1 hereof may be
assigned only to a party who acquires from Holder at least One Hundred Thousand
(100,000) shares of Common Stock that constitute the original number of
Registrable Securities (as such number may be adjusted to reflect subdivisions,
combinations and stock dividends of Excite's Common Stock) or as a distribution
made by a Holder which is a partnership to the partners of such Holder of
Registrable Securities; provided, however that no party may be assigned any of
the foregoing rights until Excite is given written notice by the assigning party
at the time of such assignment stating the name and address of the assignee and
identifying the securities of Excite as to which the rights in question are
being assigned; provided, further that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 2.
3. GENERAL PROVISIONS.
3.1 Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if deposited in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
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(a) if to Excite, at:
Excite, Inc.
555 Broadway
Redwood City, CA 94063
Attention: Chief Financial Officer
Facsimile: 650/568-6039
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Mark Stevens
Facsimile: 650/494-1417
(b) If to Holders:
To the address set forth on Exhibit A hereto
with a copy to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, WA 98101
Attention: Gregory Gorder
Facsimile: 206/583-8500
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or when
deposited in the mail in the manner set forth above.
3.2 Entire Agreement. This Agreement and the Plan constitute
and contains the entire agreement and understanding of the parties with respect
to the subject matter hereof and supersede any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof.
3.3 Amendment of Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of Excite and Holders of a majority of all Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this Section 3.3 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and Excite.
3.4 Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the laws of the State of California,
excluding that body of law relating to conflict of laws.
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3.5 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
3.6 Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties hereto
and their successors and assigns, any rights or remedies under or by reason of
this Agreement.
3.7 Successors And Assigns. Subject to the provisions of
Section 2.1, the provisions of this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and permitted assigns of the parties
hereto.
3.8 Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
3.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.10 Costs And Attorneys' Fees. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
Agreement or any transaction contemplated hereunder, the prevailing party shall
recover all of such party's costs and attorneys' fees incurred in each such
action, suit or other proceeding, including any and all appeals or petitions
therefrom.
3.11 Legends.
Each Holder understands that prior to the effectiveness of the
Registration Statement certificates or other instruments representing any of the
Registrable Securities acquired by Holder will bear legends substantially
similar to the following, in addition to any other legends required by federal
or state laws:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN
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COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
Each Holder agrees that, in order to ensure and enforce
compliance with the restrictions imposed by applicable law and those referred to
in the foregoing legends, or elsewhere herein, Excite may, prior to the
effectiveness of the Registration Statement issue appropriate "stop transfer"
instructions to its transfer agent, if any, with respect to any certificate or
other instrument representing Registrable Securities, or if Excite transfers its
own securities, that it may make appropriate notations to the same effect in
Excite's records.
Each Holder also understands that subsequent to the
effectiveness of the Registration Statement, upon the written request of a
Holder, the Holder may surrender the certificates or other instruments
representing any of the Registrable Securities and Excite will, as promptly as
practicable, cause the legend described above to be replaced with a legend
substantially similar to the following (in addition to any other legends
required by state laws):
THE RESALE OF THE SHARES REPRESENTED HEREBY MAY BE MADE ONLY
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT
TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT BETWEEN EXCITE
AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF EXCITE.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
EXCITE, INC. SHAREHOLDERS
By: /s/ Robert C. Hood By:
------------------------------ -----------------------------
Title: EVP-CFO Name:
----------------------------- ---------------------------
Title:
--------------------------
(if applicable)
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
11
<PAGE> 1
EXHIBIT 23.02
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 333-_______) of Excite, Inc. for the
registration of 3,998,258 shares of its common stock and to the incorporation by
reference therein of our report dated February 29, 1997, with respect to the
consolidated financial statements of Excite, Inc. included in its annual report
on Form 10-K, as amended by Form 10-K/A, for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
February 24, 1998
1
<PAGE> 1
EXHIBIT 23.03
CONSENT OF PRICE WATERHOUSE LLP, INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of our report dated August 6, 1996, which appears on page
42 of the 1996 Annual Report on Form 10-K/A of Excite, Inc. relating to the
financial statements of The McKinley Group, Inc., which do not appear in such
Annual Report on Form 10-K/A.
/s/ PRICE WATERHOUSE LLP
- ----------------------------
PRICE WATERHOUSE LLP
San Jose, California
February 23, 1998
